Intel said Tuesday that it would cut 11% of its workforce — or about 12,000 employees. The news came as Intel reported financial results for the first quarter that were roughly in line with Wall Street estimates, but the company forecast weaker-than-expected sales for the current quarter.
The cuts will save Intel, the world’s largest chipmaker, an estimated $1.4 billion annually once the are completed and allow the Santa Clara, Calif.-based company to refocus its resources on new areas of growth. The company will also take $1.2 billion restructuring charge.
“These actions drive long-term change to further establish Intel INTC -0.08% as the leader for the smart, connected world,” Intel CEO Brian Krzanich wrote in a memo to employees. “I am confident that we’ll emerge as a more productive company with broader reach and sharper execution.”
Intel isn’t providing much clarity at this time on where exactly most of these cuts will be taking place. Tech analyst Patrick Moorhead suspects that they will take place mostly in the generic PC business, while continuing to invest in growing niche PC markets, such as gaming PCs and 2-in-1 laptops. “This is really about how to get more money to invest in the Internet of Things, data center and memory,” Moorhead said.
“If you look at the journey the company has been on for the last several years, we’re transitioning away from being at the heart of the PC market to a company at the heart of cloud and a lot of difference devices, which the PC is one,” said Intel chief financial officer Stacy Smith in an interview.
Intel also announced on Tuesday that CFO Stacy Smith will move into a new executive role, leading sales, manufacturing and operations. Smith will stay on as CFO while the company searches for a replacement in the coming months.
