Following its recent acquisition of IoT company, Yogitech to focus on fully autonomous vehicles, Intel Corporation has 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.
CEO Brian Krzanich emailed Intel employees with the bad news: “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 centre 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 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.”
Brian expects that this initiative will result in the reduction of up to 12,000 positions globally — approximately 11% of the company’s employees.
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.
Intel expects the cuts to deliver $750 (£522) million in savings this year and annual run rate savings of $1.4 billion (£974,082,452) by mid-2017. The company will record a one-time charge of approximately $1.2 billion (£834,805,836) in the second quarter.
“These are not changes I take lightly,” said the CEO. “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.”
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 centre IoT, memory and connectivity businesses, as well as growing client segments such as 2-in-1s, gaming and home gateways.