Intel to Cut Workforce as Sales Struggle

Cuts in jobs at Intel could affect as many as 5,400 jobs. Intel on Friday said it expected to lower its workforce during 2014 by 5%.

The chipmaker ended last year with 107,600 workers, which means the cuts of up to 5%, could affect over 5,000 employees.

Last week, Intel projected its revenue would be flat for 2014, while Wall Street analysts had predicted that revenue growth would reach 1.2%. While the business of selling chips made for PCs has showed signs of becoming stable, the business at Intel of selling chips for servers did not grow as expected.

The number of employees at Intel has swelled at a steady rate for years following the restructuring that was ordered by then CEO Paul Otellini in 2006.

He resigned from that position this past may and was replaced by Brian Krzanich who shifted the priorities of the company in many areas.

The new CEO for example has increased the efforts of Intel to target chips toward devices that are wearable as well as in tablets and smartphones. Plans of shifting employees into different tasks, and lowering overall head count, were mentioned on Thursday while the CEO gave a conference call following the release of the company’s earnings report.

The chief financial officer for Intel, Stacy Smith said that employment would be lowered over the 12 months of this year. Smith said a significant shift in company investment would be experienced over the course of this year.

Smith did not quantify the amount of reduction, which on Friday was confirmed by a spokesperson at Intel. The spokesperson said cuts in employees were not representative of a layoff, but would take place through other forms.

On Thursday, Intel reported its net income for the quarter that ended on December 28 was $2.63 billion equivalent to 51 cents per share, which compared to profits during the same period a year earlier of $2.47 billion equivalent to 48 cents per share. Revenue for the chipmaker was up from last year’s same period of $13.48 billion to $13.83 billion.

Analysts were expecting earnings of 52 cents a share and revenue of more than $13.7 billion.

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