Intel shares fall 20% on plans to cut 15,000 jobs
Intel plans to cut 15,000 jobs and reduce capital spending by 20% to stabilize finances amid challenges. Shares fell 20% as revenue declined, raising concerns about its recovery strategy.
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Intel announced plans to cut approximately 15,000 jobs, representing a 15% reduction in its workforce, as part of a strategy to stabilize its finances amid ongoing challenges in its turnaround efforts. The company also revealed it would reduce capital spending by 20% this year and eliminate its dividend. Following this announcement, Intel's shares plummeted by 20% in after-market trading, reflecting a significant loss of confidence from investors regarding CEO Pat Gelsinger's ability to execute his ambitious recovery plan.
The company attributed its struggles to production issues with its new Meteor Lake processors and a shift in customer spending towards AI chips from competitors like Nvidia, which has impacted sales in its data center division. Intel's revenue for the second quarter fell 1% to $12.8 billion, below analyst expectations, and it projected third-quarter revenue between $12.5 billion and $13.5 billion, with a pro forma loss anticipated.
Despite these setbacks, Gelsinger maintained that Intel's long-term competitive position remains intact and that the company is on track to benefit from recent investments in manufacturing technology by 2026. However, the immediate outlook appears challenging, with Wall Street expressing concerns about Intel's ability to regain market share in a rapidly evolving semiconductor landscape.
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