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In a cost cutting move, Intel announced it will be cutting its workforce of up to 12,000 jobs by the middle of 2017. This move is being billed as “restructuring to speed its transition” into a company refocused on building its “Internet of Things (IoT) and data center businesses as it fights the effect of the PC market’s continuing decline.
According to the manufacturer, both data centers and IoT products are Intel’s main areas of growth, with memory and field programmable gate arrays (FPGAs) helping accelerate progress. Both these areas provided $2.2 billion in revenue growth last year, making up 40 percent of revenue, and the “majority of operating profit.”
An e-mail provided to Intel employees from CEO Brian Krzanich justifies the losses by claiming “Our results over the last year demonstrate a strategy that is working and a solid foundation for growth. The opportunity now is to accelerate this momentum and build on our strengths.”
The layoffs are expected to continue until mid-2017, along with site consolidations worldwide, with employees to be advised of these actions in more detail over the next 60 days. The program is expected to provide $750 million in savings for this year, with annual run rate savings of $1.4 billion by mid-2017.
The announcement arrives at the same time as Intel’s latest quarterly earnings report, with it bringing in a revenue of $13.7 billion, an operating income of $2.6 billion, net income of $2 billion, and an earning per share of 42 cents. Approximately $4 billion in cash was generated from operations, $1.2 billion in dividends were paid, and 27 million shares were bought back at a cost of $793 million.
“Our first-quarter results tell the story of Intel’s ongoing strategic transformation, which is progressing well and will accelerate in 2016,” said Krzanich. “We are evolving from a PC company to one that powers the cloud and billions of smart, connected computing devices.”
For its key business units, the Client Computing Group saw revenue of $7.5 billion, down 14 percent sequentially, but up 2 percent on the same quarter last year, with its Non-Volatile Memory Solutions Group also seeing a reduction in revenue sequentially to $557 million, down 6 percent year-on-year. Intel Security Group rose 12 percent year-on-year to $537 million, Programmable Solutions contributed $359 million, Internet of Things was up 22 percent year-on-year to $651 million, and the Data Center Group increased on an annual basis by 9 percent to $4 billion.
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