The major PC processor maker Intel has just announced some major changes to its business in order to cut overall costs. Those changes include eliminating about 15,000 jobs, which the company stated will affect about 15 percent of its total workforce.
Intel posted an email sent by its CEO Pat Gelsinger to the company's employees today. He wrote in part:
Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate. Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.
Gelsigner stated that the decision to lay off 15,000 of Intel's employees is "the hardest thing I’ve done in my career." He added that the company will launch an "enhanced retirement offering" along with a program to accept voluntary departures sometime next week.
The news comes at the same time that Intel revealed its financial results for the second quarter of 2024. Revenues came in at $12.8 billion, which was down 1 percent from the same period a year ago. It lost $1.61 billion for the quarter, compared to a net income of $1.47 billion for the same period a year ago.
In addition to the layoffs, which are expected to be mostly completed by the end of 2024, Intel also announced a cost reduction plan that will total $10 billion. Intel hopes to spend about $20 billion for all of 2024, followed by just 17.5 billion in 2025. It also plans to cut costs even further in 2026 but did not provide details. Intel will also pause offering dividends for people who own stock in the company starting in the fourth quarter of 2024.
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