SANTA CLARA, Calif. – Intel Corporation (NASDAQ:INTC) on April 19 announced that it will cut up to 12,000 jobs globally, or about 11% of employees, by mid-2017 as part of its plan to focus more on data center and Internet of Things (IoT) businesses as PC sales are falling mainly due to mobile and tablet devices.
The company believes that focusing on memory and field programmable gate arrays (FPGAs) in data center and IoT segments will increase its operating profit. These opportunities will fuel “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,” Intel Corporation said in a statement.
The company said that it plans to spend more money on its data center, IoT, memory and connectivity businesses. At the same time, the tech giant wants to focus on growing client segments such as 2-in-1s, gaming and home gateways.
“These actions drive long-term change to further establish Intel as the leader for the smart, connected world,” the company’s CEO Brian Krzanich said in a statement. “I am confident that we’ll emerge as a more productive company with broader reach and sharper execution.”
As a result of Intel Corporation (NASDAQ:INTC)’s new plan, 12,000 jobs will be lost globally. The goal of reducing workforce by about 11% of employees will achieved through site consolidations worldwide, a combination of voluntary and involuntary departures, and a re-evaluation of programs, according to the company.
Affected employees will be notified over the next 60 days.
These changes will allow Intel to save $750 million this year and $1.4 billion by mid-2017. The company will record a one-time charge of approximately $1.2 billion in the second quarter.
For the first quarter, Intel reported a profit of $2.0 billion, or 42 cents per share, on a revenue of $13.7 billion. The company’s Data Center Group generated a revenue of $4.0 billion, up 9% year-over-year. Its Internet of Things Group revenue grew 22% year-over-year to $651 million.
In addition, Intel announced a CFO succession plan as the current CFO will move to a new role at the company, with responsibilities for sales, manufacturing and operations.
Shares of Intel Corporation (NASDAQ:INTC) have lost more than 9% of their value since the start of 2016. During the last trading session, the stock dropped by 1.03% to $31.64.