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Intel plans to cut 12,000 jobs, or 11% of its workforce. It will take a $1.2 billion charge as a result.
Trading was halted around the release, then the stock immediately dropped when trading resumed. It’s down about 3%.
But Intel beat on earnings and revenue. Here are the reported numbers for Q1 2016:
EPS (non-GAAP): $0.54 vs. $0.49 expected. That’s up 2% from last year. Revenue: $13.80 billion vs. $13.84 billion expected. But that number includes $99 million from a deferred revenue write-down – without that, revenue would’ve come in at $13.70 billion. That’s still a 7% increase over last year.
Intel gave weaker than expected revenue guidance for Q2 – it expects around $13.5 billion. Yahoo Finance pegged previous consensus estimates at $14.16 billion.
It also announced that its CFO, Stacy Smith, will step down. A successor has not been named. Smith will move to a new role leading sales and operations.
Revenue was up slightly in the company’s largest segment, Client (PCs), coming in at about $7.5 billion. Revenue in the Data Center segment – chips for servers used in data centers – was up about 4% to $4.0 billion.
Last year, reports came out that Intel planned to cut up to 3% of its workforce, but these layoffs are considerably steeper.
The company is in the middle of a revamp as it hopes to overcome a years-long slump in PC sales and do a better job capitalizing on the rise of mobile devices, which have typically been dominated by chips designed and built by rivals, like ARM and Qualcomm.
The company’s latest big push has been into the “Internet of Things” – basically, getting its chips into all sorts of household and common objects to let them communicate with each other and apps over networks, including the public internet.
Recently, an executive that Intel hired from Qualcomm, Venkata “Murthy” Renduchintala, slammed the company in an internal memo, citing a “lack of product/customer focus in execution that is creating schedule and competitiveness gaps in our products.”