Pat Gelsinger, the American business executive and engineer who made a name for himself at Intel by, among other accomplishments, creating the i486 microprocessor in the 1980s, has announced that he will be laying off 15,000 roles at Intel (15% of its workforce) as part of a cost reduction plan meant to increase the company’s efficiency and competitiveness in the tech market. Gelsinger, who became the CEO of Intel in 2021, confirmed the news in a letter addressed to employees today, telling them that this was the “hardest thing” that he has ever had to do in his lengthy career.
Intel’s new priorities include:
- “Reducing Operational Costs: We will drive companywide operational and cost efficiencies, including the cost savings and head count reductions mentioned above.”
- “Simplifying Our Portfolio: We will complete actions this month to simplify our businesses. Each business unit is conducting a portfolio review and identifying underperforming products. We are also integrating key software assets into our business units so we accelerate our shift to systems-based solutions. And we will narrow our incubation focus on fewer, more impactful projects.”
- “Eliminating Complexity: We will reduce layers, eliminate overlapping areas of responsibility, stop non-essential work, and foster a culture of greater ownership and accountability. For example, we will consolidate Customer Success into the Sales, Marketing and Communications Group to streamline our go-to-market motions.”
- “Reducing Capital and Other Costs: With the completion of our historic five-nodes-in-four-years roadmap clearly in sight, we will review all active projects and equipment so we begin to shift our focus toward capital efficiency and more normalized spending levels. This will reduce our 2024 capital expenditures by more than 20%, and we plan to reduce our non-variable cost of goods sold by roughly $1 billion in 2025.”
- “Suspending Our Dividend: We will suspend our stock dividend beginning next quarter to prioritize investments in the business and drive more sustained profitability.”
- “Maintaining Growth Investments: Our IDM2.0 strategy is unchanged. Having fought hard to reestablish our innovation engine, we will maintain the key investments in our process technology and core product leadership.”
Analysts pointing out Intel’s apparently poor performance as of late:
It was a very rough Q2 for $INTC. And that guide… Thanks, @Pgelsinger, for the time to discuss.
— Patrick Moorhead (@PatrickMoorhead) August 1, 2024
It appears that there were yield/throughput issues on Meteor Lake, negatively impacting gross margins. When you have to get the product to your customers, and you have wafers to… pic.twitter.com/pHU66xvFe7
Gelsinger wrote to employees:
We plan to deliver $10 billion in cost savings in 2025, and this includes reducing our head count by roughly 15,000 roles, or 15% of our workforce. The majority of these actions will be completed by the end of this year.
This is painful news for me to share. I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history.
…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.
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wow so another 5k on top of the estimated 10k. That's not very nice. Lets see if they are profitable enough to get those sweet sweet bonuses.
We plan to reduce our costs by $10 billion in 2025.......
...... with $9 billion of those savings going directly to the CEO and board members in stock options and bonuses.
"Riccochet, post: 87756, member: 4" wrote:We plan to reduce our costs by $10 billion in 2025.......
...... with $9 billion of those savings going directly to the CEO and board members in stock options and bonuses.
While that typically happens, a sign that things could be changing is that the intel stock took a rightful beating today. If this continues, Pat will not get his golden parachute.
"Slag-King, post: 87765, member: 5436" wrote:While that typically happens, a sign that things could be changing is that the intel stock took a rightful beating today. If this continues, Pat will not get his golden parachute.
Everything has taken a beating this week. The entire market is down badly. It's not just intel.
Those at the top who proclaim that the latest round of layoffs is painful surely are not the ones experiencing the pain of having been laid off.
"Riccochet, post: 87769, member: 4" wrote:Everything has taken a beating this week. The entire market is down badly. It's not just intel.
Yeah DOW was in a freefall today. However, AMD stock went up...I'm hearing the Jaws theme over there over Pat's head.
Discussion (6 replies)
Join Discussion →wow so another 5k on top of the estimated 10k. That's not very nice. Lets see if they are profitable enough to get those sweet sweet bonuses.
We plan to reduce our costs by $10 billion in 2025.......
...... with $9 billion of those savings going directly to the CEO and board members in stock options and bonuses.
While that typically happens, a sign that things could be changing is that the intel stock took a rightful beating today. If this continues, Pat will not get his golden parachute.
Everything has taken a beating this week. The entire market is down badly. It's not just intel.
Those at the top who proclaim that the latest round of layoffs is painful surely are not the ones experiencing the pain of having been laid off.
Yeah DOW was in a freefall today. However, AMD stock went up...I'm hearing the Jaws theme over there over Pat's head.