Intel Corporation today announced a restructuring initiative to accelerate its evolution from a PC company to one that powers the cloud and billions of smart, connected computing devices. Intel 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.
The data center and Internet of Things (IoT) businesses are Intel’s primary growth engines, with memory and field programmable gate arrays (FPGAs) accelerating these opportunities – fueling a virtuous cycle of growth for the company. These growth businesses delivered $2.2 billion in revenue growth last year, and made up 40 percent of revenue and the majority of operating profit, which largely offset the decline in the PC market segment.
The restructuring initiative was outlined in an e-mail from Intel CEO Brian Krzanich to Intel employees.
“Our results over the last year demonstrate a strategy that is working and a solid foundation for growth,” said Krzanich. “The opportunity now is to accelerate this momentum and build on our strengths.
“These actions drive long-term change to further establish Intel as the leader for the smart, connected world,” he added. “I am confident that we’ll emerge as a more productive company with broader reach and sharper execution.”
While making the company more efficient, Intel plans to increase investments in the products and technologies that that will fuel revenue growth, and drive more profitable mobile and PC businesses. Through this comprehensive initiative, the company plans to increase investments in its data center, IoT, memory and connectivity businesses, as well as growing client segments such as 2-in-1s, gaming and home gateways.
These changes will result in the reduction of up to 12,000 positions globally — approximately 11 percent of employees — by mid-2017 through site consolidations worldwide, a combination of voluntary and involuntary departures, and a re-evaluation of programs. The majority of these actions will be communicated to affected employees over the next 60 days with some actions spanning in to 2017.
Intel expects the program to deliver $750 million in savings this year and annual run rate savings of $1.4 billion by mid-2017. The company will record a one-time charge of approximately $1.2 billion in the second quarter.
Source: Intel Corporation
MacDailyNews Note: E-mail to Employees by Intel CEO Brian Krzanich
Subject: Today’s Announcement
Date: April 19, 2016
Since I became CEO nearly three years ago, I have been working with our leadership team and all of you to transform our company from a PC company to a company that powers the cloud and billions of smart, connected computing devices. 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.
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.
These are not changes I take lightly. We are saying goodbye to colleagues who have played an important role in Intel’s success. We are deeply committed to helping our employees through this transition and will do so with the utmost dignity and respect.
Today’s announcement is about accelerating our growth strategy. And it’s about driving long-term change to further establish Intel as the leader for the smart, connected world.
As we drive this transformation, there is an extraordinary opportunity ahead. We will emerge as a more productive company with broader reach, and sharper execution.
I know that many of you will have questions about these changes. You’ll hear more details from me, and from the rest of Intel’s leadership team, in the coming days and weeks. To get started, I encourage you to attend the Q2 BUM later today.
You’re also invited to listen to the company’s first-quarter earnings conference call with investors here. Information about these changes will also be available on Circuit
Thank you for your support. I look forward to talking with you all soon.
MacDailyNews Take: Ouch. Good luck to those affected.
Now, perhaps Apple will take matters further into their hands to ensure that their personal computing products, including Macs, remain unmatched regardless of outside issues:
In order to build the best products, you have to own the primary technologies. Steve felt that if Apple could do that—make great products and great tools for people—they in turn would do great things. He felt strongly that this would be his contribution to the world at large. We still very much believe that. That’s still the core of this company. — Apple CEO Tim Cook, March 18, 2015
There is no reason why Apple could not offer both A-series-powered Macs and Intel-based Macs. The two are not mutually exclusive. — MacDailyNews, January 14, 2015
Apple in ‘advanced talks’ to acquire Imagination Technologies for PowerVR GPU – March 22, 2016
Apple’s taking big steps toward controlling even more primary technology – December 15, 2015
Apple buys former chip fab in San Jose, California – December 15, 2015
Apple operating secret laboratory in Taiwan to develop new, thinner displays for iPhone, iPad and Macintosh – December 14, 2015
Mac sales to grow in enterprise with new Apple A-series-powered Mac – October 14, 2015
Apple A-series-powered Macs are not only feasible, they may be inevitable – January 15, 2015
Why Apple dumping Intel processors would be disastrous – January 14, 2015
KGI: Apple is designing its own processors for Mac – January 14, 2015
Apple A9-powered MacBook Air? – December 16, 2014
Why Apple will switch to ARM-based Apple A-series-powered Macs – August 27, 2014
Intel-powered Macs: The end is nigh – August 4, 2014
Intel’s Broadwell chips further delayed; not shipping for most Macs until early-mid 2015 – July 9, 2014
Apple will inevitably drop Intel for their own A-series processors in the Mac – June 26, 2014
How long before Apple dumps Intel from MacBook Air? – June 26, 2013