Intel to cut workforce by 15%, shares plunge
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The news: Intel will cut more than 15% of its workforce as part of its previously announced USD10 billion ($15.4 billion) cost reduction plan to "increase efficiency and market competitiveness".
The numbers: Intel shares, which have lowered more than 40% over the last 12 months, were down 19% by 9:00am AEST in after-hours trading on the Nasdaq, having shed 5.5% during the day.
The planned layoffs are expected to impact around 17,500 staff, according to Reuters. The company said the majority of the cuts would be completed by the end of 2024.
Intel reported Q2 revenue of USD12.8 billion, down 1% year over year. A loss of 38 US cents per share compared to earnings of 35 US cents per share a year earlier.
The company said it expects third-quarter revenue to be between USD12.5 billion and USD13.5 billion, compared with analysts' average estimate of USD14.35 billion, according to LSEG data.
The context: Intel CEO Pat Gelsinger described the Q2 result has "disappointing", with second-half trends "more challenging than we previously expected".
Intel will also suspend its dividend, starting in the fourth quarter, noting "the importance of prioritizing liquidity" to support investments needed to execute its cost-cutting strategy.
California-based Intel has been investing heavily to transform its business to compete with its chipmaking rival Taiwan Semiconductor Manufacturing Co (TSMC).
However, TSMC continues to dominate the market, while Intel Foundry, Intel's new division responsible for its manufacturing operations, experiences further revenue declines.
What they said: Gelsinger told Reuters: "I need less people at headquarters, more people in the field, supporting customers".
On the dividend suspension, he said: "Our objective is to ... pay a competitive dividend over time, but right now, focusing on the balance sheet, deleveraging".
The sources: Intel earnings release, Reuters
