Intel shares drop three per cent in after hours as tech company announces plans to cut 11 per cent of its global workforce

 
Caitlin Morrison
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Intel Announces The Xeon 5100 Microprocessor For Servers
The shrinking personal computer market has had an impact on Intel's traditional chip-making business (Source: Getty)

Tech giant Intel has announced it plans to cut 12,000 jobs globally - equal to around 11 per cent of its workforce.

Intel announced the job losses in its results for the first quarter of 2016, and said it had made the decision based on its plans to refocus on its data centre business as opposed to its traditional business of selling chips for use in personal computers.

Intel said its data centre and Internet of Things businesses are the company's primary growth engines, adding $2.2bn (£1.5bn) in revenue growth last year, making up 40 per cent of total revenue and the majority of operating profit, "which largely offset the decline in the PC market segment".

"We are evolving from a PC company to one that powers the cloud and billions of smart, connected computing devices,” said Intel chief exec Brian Krzanich.

The group expects the job cuts to deliver $750m in savings this year, but said it would record a one-time $1.2bn pre-tax restructuring charge in the second quarter.

The firm also revised its revenue outlook for the year downwards, and said it expects sales to go up by "mid-single digits, down from prior outlook of mid- to high-single digits".

The company's share price fell 2.94 per cent in after hours trading.

Intel's revenue was up seven per cent to $13.7bn for the first quarter, compared with $12.78bn in the same period of 2015, and profit rose three per cent to $2bn. Earnings per share rose to $0.42 from $0.41 a year earlier.

Meanwhile, Intel's chief financial officer Stacy Smith is moving to a new role leading sales, manufacturing and operations. He will take up the new role once his successor is in place - and the process to find a new finance chief is set to begin, with the company looking at both internal and external candidates.

“We are excited to have Stacy take on this new role, leveraging the deep expertise and strong leadership skills that he has developed over his 28-year career at Intel,” said Krzanich.

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