Intel to cut 5,000 jobs as demand falls for its chips
Print Edition
Intel plans to trim more than 5,000 jobs from its workforce this year in a bid to boost earnings amid waning demand for its personal computer chips.
The Santa Clara-based company confirmed the job cuts on Friday, the day after Intel Corp reported its profit and revenue had fallen for the second consecutive year.
The purge represents about 5 percent of the roughly 108,000 jobs that Intel had on its payroll at the end of December. The company intends to lose the jobs without laying off workers, said a spokesman. Reductions will be achieved through attrition, buyouts and early retirement.
The company didn’t estimate how much money it hopes to save by losing jobs. But Intel needs to pare expenses if it hopes to end a two-year slump that has seen its earnings fall from US$12.9 billion in 2011 to US$9.6 billion in 2013. Intel is forecasting its revenue this year will be about the same as in 2013, making it unlikely its profits can rise without cost cuts.
This marks Intel’s first significant job cuts since a company insider, Bryan Krzanich, succeeded Paul Otellini as CEO eight months ago.
“We are constantly evaluating and realigning our resources to meet the needs of our business,” the Intel spokesman said.
Intel’s financial performance is faltering because it didn’t adapt quickly enough as smartphones and tablet computers undercut sales of PCs running on its chips. Worldwide PC sales have dropped from the previous year in seven consecutive quarters, an unprecedented decline.
The trend is a problem for Intel because most mobile devices don’t rely on its processors.
As Intel has struggled to come up with a successful strategy for mobile computing, it has turned into a stock market laggard. Since Intel’s stock hit a five-year high of US$29.27 in May 2012, shares have fallen 12 percent.
Intel’s stock dropped 69 cents on Friday to close at US$25.85, then dipped another 4 cents in extended trading.
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