Intel is planning a layoff of up to 12,000, or 11 percent of the company, as the company continues to wrestle with life in the upcoming post-PC era.
The layoffs were announced alongside first-quarter earnings this afternoon. Intel expects to complete its restructuring by the second quarter of 2017.
At press time, the company’s shares were down about 3 percent, at $30.70.
As PC sales decline, Intel hopes to morph into a company serving cloud computing and the Internet of Things (IoT). This was evident at last summer’s Intel Developer Forum in San Francisco, where “makers” and IoT took center stage, while PCs and servers got shoved into a virtual back closet.
And with good reason. Recent reports show PC sales dropping precipitously — down 9.6 percent in the first quarter, according to Gartner.
About 60 percent of Intel’s revenues are related to PCs, and the company has been forecasting that business to be flat long-term, RBC Capital Markets analyst Amit Daryanani wrote in a recent research note.
Other areas such as networking are rising to fill the void. But networking and IoT tend to consume chips that aren’t Intel’s most expensive, such as the diminutive Atom line.
Intel believes the layoffs will save it $750 million this year and $1.4 billion per year after that. The restructuring will result in a $1.2 billion charge against second-quarter earnings.
For its first quarter, Intel reported revenues of $13.7 billion and net income of $2 billion, or 42 cents per share.
Revenues for the same quarter a year ago were $12.8 billion, with net income of $2 billion, or 41 cents per share.
The company is forecasting revenues of $13.5 billion for its second quarter.