Intel has announced a restructuring initiative that will result in the departure of 12,000 employees from around the globe.
The aim of the restructuring is to ‘accelerate its evolution from a PC company to one that powers the cloud and billions of smart, connected computing devices’.
The firm will intensify its focus in high-growth areas where it is positioned for long-term leadership, customer value and growth, while making the company more efficient and profitable.
Intel expects the program to deliver $750 million in savings this year and annual run rate savings of $1.4 billion by mid-2017.
In an email to employees, Intel CEO Brian Krzanich said: “The data center and Internet of Things businesses are now Intel’s primary growth engines, and combined with memory and FPGAs, form and fuel a virtuous cycle of growth. Together, these businesses delivered $2.2 billion in revenue growth last year, made up 40% of our revenue, and the majority of our operating profit.
“Our results demonstrate a strategy that’s working and a solid foundation for growth. Our opportunity now is to accelerate our momentum and build on our strengths. But this requires some difficult decisions. With that context, today we are announcing a restructuring initiative that will allow Intel to intensify our investments in the products and technologies that fuel our growth, and drive more profitable mobile and PC businesses.
He continued: “We expect that this initiative will result in the reduction of up to 12,000 positions globally. This will be achieved by voluntary and involuntary departures, global site consolidation, and efficiency initiatives. The majority of these actions will be communicated over the next 60 days, with some spanning into 2017.”
Intel today reported first-quarter GAAP revenue of $13.7 billion, operating income of $2.6 billion, and net income of $2.0 billion.
The firm reported Client Computing Group revenue of $7.5 billion, down 14 per cent sequentially and up 2 per cent year-over-year.
Data Center Group revenue was $4.0 billion, down 7 per cent sequentially and up 9 per cent year-over-year.
Revenue from its Internet of Things Group reached $651 million, up 4 per cent sequentially and up 22 per cent year-over-year.
Intel has also announced a CFO succession plan. The current CFO, Stacy Smith, will transition to a new role at the company, leading sales, manufacturing and operations once his successor is in place.
The company is beginning a formal search process for a new CFO that will assess both internal and external candidates.
"We are excited to have Stacy take on this new role, leveraging the deep expertise and strong leadership skills that he has developed over his 28-year career at Intel," said Krzanich.