Intel is going to layoff thousands of employees. The company said that it will cut more than 15% of its workforce, about 17,500 people. Intel plans to cut its expenses by about $20 billion this year. The company has suffered a loss of about $1.6 billion in the recent quarter. This news shocked investors, due to which Intel’s shares have seen a decline.
Shares fell 20%
Intel’s stock price fell 20% in extended trading, losing more than $24 billion in market value, after the chipmaker announced job cuts and the suspension of its dividend. Intel’s stock had closed down 7% on Thursday.
The company’s CEO Pat Gelsinger issued a statement saying, “Our second quarter performance was quite poor even though we have achieved major product and technology milestones. The trends in the second half are more challenging than our previous expectations.” Chief Financial Officer David Zinsner said, “By reducing our expenses, we are taking active steps to improve our profitability and strengthen our balance sheet.”
There will be a cut by the end of 2024
The Santa Clara, California-based company employed 1,16,500 people as of June 29. It said most of the job cuts would be completed by the end of 2024. The company said it would cut operating expenses and reduce capital expenditure by more than $10 billion in 2025, more than initially planned, Reuters reported.
The company also put a halt on its investment in Israel
Troubled by losses, Intel announced in June that it was halting the expansion of a major factory project in Israel. The company was planning to invest an additional $15 billion for a chip plant in Israel. Intel faces tough challenges from rivals Nvidia, AMD and Qualcomm. For decades, Intel has dominated the market for chips used in everything from laptops to data centers, but in recent years companies like Nvidia have moved ahead in the field of AI.
The stock has fallen more than 40% this year
It also forecast third-quarter revenue below market estimates. For the third quarter, Intel expects revenue of $12.5 billion to $13.5 billion, compared with analysts’ average estimate of $14.35 billion, LSEG data showed. It forecasts an adjusted gross margin of 38%, lower than market expectations of 45.7%. As of June 29, the company had cash and cash equivalents of $11.29 billion and total current liabilities of about $32 billion. Intel shares have fallen more than 40% so far this year.
