Intel is aggressively cutting its workforce, planning to shrink it by more than one-third to combat operating losses and achieve financial stability.
Intel's Recent Steps Are Towards Achieving Financial Efficiency In Order to Boost Shareholder Value
Team Blue's CEO, Lip-Bu Tan, was expected to come up with strategies that would be aggressive, but necessary to steer Intel towards an economic rebound, and one of the core strategies adopted by Tan is widespread layoffs. Intel has been reporting a process of layoffs for several weeks now; however, in the recent Q2 earnings, the firm revealed that it plans to have a headcount of 75,000 employees, which marks a reduction of more than 30% of its workforce from a year ago (via CRN). Historically, this marks one of the biggest layoff rounds by the company.
We are currently unaware of where the next major layoffs would occur, but based on our estimates, the more affected areas would be Intel's investments that haven't managed to reach expectations, and this includes regions like Germany, Poland, and Costa Rica, where the layoff percentages would be relatively higher. Wall Street has demanded that Intel show them the path to profitability, and layoffs are one way to reduce a chunk of operating losses, and this is what CEO Tan is currently targeting.
Intel's CEO has been making efforts to flatten the organization by merging roles and creating newer divisions that cater to consumer demand. The priority here is to achieve financial efficiency, hence Intel won't pursue any project that doesn't show convincing financial prospects, which is why Intel Foundry and its chip roadmap will take a massive hit, one that would likely surprise many of the company's fans out there.
We are laser-focused on strengthening our core product portfolio and our AI roadmap to better serve customers. We are also taking the actions needed to build a more financially disciplined foundry. It’s going to take time, but we see clear opportunities to enhance our competitive position, improve our profitability and create long-term shareholder value.
The situation at Intel is dire, indeed. The company is in the pursuit of a financial rebound, which, from the looks of it, will take several months, if not years. One thing that is certain is that CEO Tan does seem geared up to take difficult steps, and more importantly respect shareholder value, something which the markets do see with a lot of optimism.
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