Intel cuts 12000 jobs

We reported it over the weekend already and the numbers are even far worse then we expected, Intel will cut 12000 jobs, 11% of its total workforce.

The restructuring announced along with first-quarter results on Tuesday is Intel’s largest yet in terms of the number of employees affected.

Wallstreet journal:

Chief Executive Brian Krzanich described the move as tough but necessary, not only to cut costs but to free up money to invest in businesses that are growing.

“These are not changes I take lightly,” Mr. Krzanich wrote in an email to employees.

Intel’s troubles reflect a common challenge in the technology business. Companies that lead one generation of computing often struggle in the next. International Business Machines Corp., for example, led in large mainframe systems but was forced to stop selling PCs and low-price server systems as competition wrung profits from the business.

Makers of handsets overwhelmingly chose chips based on designs licensed from ARM Holdings PLC, which are available from a plethora of suppliers, and Google Inc.’s Android software, which is available free. No matter how good Intel or Microsoft products became, they could never counter those fundamental changes.

Sales of PCs, meanwhile, have been mainly declining since Apple’s iPad emerged in 2010. The market recently seemed to plateau, but sales again dropped in the first quarter, falling nearly 10%, Gartner Inc. estimated.

The continuing decline has forced Intel to focus on growth areas such as computers for data centers and noncomputer devices outfitted with data processing and communications capabilities, known as the Internet of Things.

Intel said the job cuts include the consolidation of operations globally, along with layoffs and voluntary departures. Intel plans to notify most of the affected employees over the next 60 days, with some actions carrying over into next year.

The company aims to save $750 million this year, with annual run-rate savings of $1.4 billion by mid-2017. It plans to post a second-quarter charge of $1.2 billion related to the cost-cutting program.