Intel to cut 5,000 jobs, warns of lower revenue
Friday, March 9th 2001, 12:00 am
By: News On 6
SAN JOSE, Calif. (AP) _ Computer chip-making giant Intel Corp. reduced its revenue estimates for the first quarter and announced it will be cutting 5,000 jobs _ or 6 percent of its work force _ during the next nine months, mainly through attrition.
Shares of Intel fell $2.31, or 7 percent, to $30.94 in after-hours trading Thursday after rising 31 cents to $33.25 in regular trading on the Nasdaq composite index.
The Santa Clara-based company expects revenue for the quarter to be down by about 25 percent from the fourth quarter's $8.7 billion. Previously, it estimated revenue would be down about 15 percent in the first quarter.
Intel executives blamed the bad news on the current economic slowdown, saying it continues to affect demand for personal computers and has spread to other sectors, including networking, communications and servers.
``This slowdown in demand for PCs has continued and has spread through nearly all sectors of our business and through all geographies,'' said Sean Maloney, director of Intel's sales and marketing group.
Intel has been branching out into other areas beyond its processors in the face of the saturated personal computer market. Now, the sour economy has caught up with these other segments, said SG Cowen Securities analyst Drew Peck.
``The processor business was already pretty much in the tank,'' he said. ``Basically, one piece of bad business has become three pieces of bad business.''
Intel earned $3.1 billion, excluding charges, on revenue of $8.02 billion, in the first quarter ended April 1, 2000.
Financial woes have beset all sectors of the high-tech industry, from chipmakers such as Intel to computer manufacturers such as Dell Computer Corp. The effects have been felt by Internet companies, networking firms and software developers.
Intel's news came a day after Internet bellwether Yahoo! Inc. warned that it would not meet earnings expectations. Sun Microsystems Inc., 3Com Corp. and JDS Uniphase Corp. also have issued warnings in recent weeks.
Last month, Intel announced a series of belt-tightening moves, including a cut in discretionary spending, delayed raises and a reduction in work force through attrition.
Intel, which has about 87,000 employees worldwide, said Thursday about 5,000 job cuts would be achieved over the next nine months. No layoffs are planned, said spokesman William Calder.
``That's probably about as much as they can cut through attrition,'' Scovel said. ``Any more than that, I think they're probably bumping into something a little bit tougher than attrition.''
The company plans to release its full earnings report on April 17.