Daily Management Review

Intel to dismiss 12 thousand employees


04/20/2016


US chip maker Intel announced a massive downsizing of its staff. The company intends to dismiss 12 thousand people worldwide, or approximately 11% of all employees of the IT-giant.



Jiahui Huang via flickr
Jiahui Huang via flickr
The layoffs are part of Intel’s restructuring activities. The company plans to continue to focus on chips for servers, the internet of things and other fast-growing markets.

According to the newspaper The Wall Street Journal citing a statement by Intel on April 19, the company will dismiss up to 12 thousand people by 2016. At the end of 2015, the number of the chip maker’s personnel worldwide totaled 107.3 thousand workers. 

Intel CEO Brian Krzanich noted that the company conducts personnel restructuring to promote long-term changes. It should allow Intel to become the leader in the world of "intelligent" network technologies.

Dismissed will be every tenth employee, by what the Intel hopes to cut costs by $ 750 million in 2016 and $ 1.4 billion by the middle of 2017. However, the corporation must first spend about $ 1.2 billion for the payment of compensation to dismissed employees and other costs associated with the announced restructuring.

Most of the employees, who come under a massive reduction, will be notified in the next two months. The restructuring process itself is planned to take more than a year, until the middle of 2017, said Intel.

The company also announced the appointment of CFO Stacy Smith to the post of head of sales, production and development. He will enter into the new position only after the new Intel CFO is found.

Intel’s shares on Tuesday, April 19 lost in value about 2.5% after the news of the cuts. Since the beginning, the chip maker quotes fell by 8.4%.

The PC market, on which Intel’s work was previously focused, is going through hard times these days. That is why the company decided to change the key areas. PC sales in the world fell in the I quarter of 2016 by 9.6% compared to the same period of the previous year. In numerical terms, this is 64.8 million units, according to Gartner’s report of research.

According to its estimates, global PC shipments in January-March 2016 amounted to 64.8 million units - 9.6% less than in the same period a year earlier. The fall in the market has continued for six consecutive quarters, but the volume of supply occured less than 65 million units for the first time since 2007.

Another well-known research firm, IDC, released few other details: PC shipments for the last quarter amounted to 60.6 million units, down year-on-year by 11.5%. According to IDC estimates, all the top five manufacturers, including ASUS and Apple, are suffering from slumping PC sales. 

source: wsj.com






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