Intel announced on Tuesday that it is planning to cut up to 12,000 jobs and is also looking into ditching some of its product lines. The announcement was made by the tech giant after its earnings call.
Murthy Renduchintala, President of the tech company who was appointed last fall, called for changes in the firm's Research and Development direction. This will allow Brian Krzanich, CEO, a chance to choose which products to maintain and which to ditch.
The Santa Clara, CA-based company indicated that its Client Computing Group will have many of the job cuts. This group handles PC/mobile CPUs and the move is in response to weak PC sales as the company tries to cut its mobile losses further.
Transferring Stacy Smith, CFO, to a new position that takes charge of sales, manufacturing and operations is fueling rumors that she is being groomed to succeed Krzanich as CEO.
The 12,000 job cuts represent 11 percent of Intel's workforce. This move is designed to refocus company operations towards producing microchips used to power data centers and internet connected devices and away from the waning personal computing industry which the company helped establish.
Tech giants like Microsoft Corp and Hewlett Packard Co have accepted the PC industry's decline since many tech users have already turned to mobile phones for their computing needs. Big corporations are also depending more on big computing machines instead of desktop units to operate their businesses.
Worldwide shipments of PCs have also dropped 11.5 percent, first quarter of this year, according to IDC, a tech company.
These developments have forced Intel, the largest chipmaker in the world, to decrease its revenue forecast for 2016. The company now looks to a revenue rise in mid-single digits, below its previous forecasts of mid-to-high single digits. Recent stock market movement has Intel's shares dropping 2.2 percent at $30.90 in extended trading.
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