Intel to eliminate 12,000 jobs
World’s biggest semiconductor company shifting focus to higher-growth areas
Intel Corp Chief Executive Officer Brian Krzanich is eliminating 12,000 jobs — the chipmaker’s deepest cutbacks in a decade — taking his most radical step yet to move Intel into new businesses and ease its dependence on the shrinking personal-computer (PC) market.
The world’s biggest semiconductor company said it’s shifting focus to higher-growth areas such as chips for data centre machines and internetconnected devices, which so far aren’t contributing enough to make up for the decline in PCs. Intel posted disappointing firstquarter revenue and gave a second-quarter sales forecast that fell short of analysts’ estimates.
As PC shipments head for their fifth straight annual decline, Intel is finding it harder to offset that slump by leaning on booming demand for server chips and gains against weaker rival Advanced Micro Devices Inc. After bringing in new executives and shaking up his management team, Krzanich’s 11 per cent workforce reduction underscores his effort to decouple Intel’s future from the PC market and accelerate a push into new markets such as chips for automotive, industrial and retail applications.
“It’s acknowledging the reality that it’s a single-digit growth world,” said Michael Shinnick, a fund manager at Wasatch Advisors Inc., which owns Intel shares. “The end markets aren’t growing to the extent that they were.”
CFO transition
Adding to recent shuffles among Intel’s leadership, Stacy Smith, who has been chief financial officer since 2007, will move to a new role as head of manufacturing and sales, the company said on Tuesday in a statement.
Intel shares, which have lagged behind other chip stocks this year, fell less than 1 per cent to $31.60 at the close in New York. They slipped 2.2 per cent in extended trading after a halt for the earnings and layoff announcements.
In the first quarter, net income rose 2.7 per cent to $2.05 billion, or 42 cents a share, while sales climbed 7.2 per cent to $13.7 billion, Intel, which is based in Santa Clara, California, said. On average, analysts had projected earnings of 37 cents and revenue of $13.8 billion. Second-quarter revenue will be about $13.5 billion, the company said in a statement.