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Intel kicks restructure into hyper-drive

By Catherine Knowles, Thu 21 Apr 2016
FYI, this story is more than a year old

As competition heats up between vendors, Intel has launched a restructuring initiative to emphasise how it is redefining its focus and adapting to the digital world.

The initiative focuses on accelerating Intel’s evolution from a PC company to one that powers the cloud and billions of smart, connected computing devices.

Under the initiative, Intel will intensify its focus in high-growth areas as well as customer value and growth, with the intention of making the company more efficient and profitable.

According to the company, the data centre and Internet of Things (IoT) businesses are Intel’s primary growth engines, with memory and field programmable gate arrays (FPGAs) contributing to these opportunities.

These growth businesses delivered $2.2 billion in revenue growth last year, and made up 40% of revenue and the majority of operating profit, which largely offset the decline in the PC market segment, Intel says.

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. The opportunity now is to accelerate this momentum and build on our strengths,” said Krzanich.

“These actions drive long-term change to further establish Intel as the leader for the smart, connected world. I am confident that we’ll emerge as a more productive company with broader reach and sharper execution,” he added.

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. The company plans to increase investments in its data centre, 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% of employees - by mid-2017 through site consolidations worldwide, a combination of voluntary and involuntary departures, and a re-evaluation of programmes.

 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 programme 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.

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