I'm in the camp that Intel will layoff more then 12,000 employees and dip into the VSP pool regardless if they reach the magic 12,000 number through ISP/VSP/ERP or closures. With the new focal system coming in Q3, they can start fresh by getting rid of as many people who were offered VSP that did not take it.
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"What about server chips? Well, the customers and competitors know that Intel makes fat margins on those. This attracts competitors -- they can win business by undercutting Intel on price."
And resentment by the handful of massive customers that represent the bulk of the revenue...
Desktop and laptop CPU revenue was down $1.5 billion in 2015. That was made up by the other divisions, so total 2015 revenue was flat to 2014. Some of it was made up from higher prices on server chips. This is very bad if you're CEO.
Yet microprocessor revenue continues to drop; shipments were down 10% in Q1'16, to the lowest level since 2011.
Desktop and laptop microprocessors are a business in long term decline. They will never be a growth business again. In addition, 7 nm is likely the last process node. In 4 years, everyone will be (stuck) there. Intel then has lost its key competitive advantage, which is speed -- getting to the next node before the competition. Once everyone is at the same node, Intel turns into General Motors. Microprocessors will still be sold, but sales growth will be matched to the growth of the overall economy (say 2%). New models will come out every year, with slight incremental improvements. Profit margins are thin, as there are many competitors.
What about server chips? Well, the customers and competitors know that Intel makes fat margins on those. This attracts competitors -- they can win business by undercutting Intel on price. The customers are financing those efforts, as one or more competitors in the market will give them huge cost savings. Hence OpenPOWER. Did you know that's where Rani Borkor landed? Hmm, why would they hire her?
In conclusion, more headcount cuts are coming. Microprocessors are in long decline, and Intel's server business will have the profits deflated from it. Intel will be getting smaller.
This is not a reduction effort. The immediate back fills are happening. It's a reduction in $$ based on salary grade/caps and getting rid of excess for diversity numbers
The actual goal is 25-30k within net 3-5 years if you look at profit $$/capita and compare vs competitors. 12k laid off is phase 1 to get Intel to lower end of distribution of this key indicator of profitability. It could even be more depending if the new growth area strategies work.
I think people who are still in the company in US, Canada and EU should get financial houses in order. this is not business as usual and you are expensive employees. Do the math.
Revenues continue to drop as PC sales drop
Major manufacturing technology are all late so costs will be sky higher than expected to get less output
Programs are being finally cut that should have been cut many years ago, and some programs that still need cut.
Lots more people need to go as Intel will be smaller soon, they are a one trick pony and that pony has died.
@HwihZ29-xqy- no I don't but my understanding is it will roll out in Q3 just in time for '16 focal.
OP - do you have more details on the new focal process amd timeline?
Intel's Board of Directors, CEO, and Executive staff are all nuts. There is no fixing Intel till shareholders jump in.
I think it will be hard to tell. If you think Intel will be down 12,000 heads from when they started this, you are nuts. This has far far more to do simply with getting rid of expensive employees than reducing numbers.
God knows, Intel can afford a CEO that decides to lose $10B chasing MSS in a slowing market, but can't afford older expensive employees. Intel can afford a CEO that spends billions on acquiring drone companies, but can't afford older expensive employees. Intel can afford a CEO that spends $16B acquiring a company worth maybe $5B, but can't afford older expensive employees.
Yes, vsp, ERP are not counted among 2k I believe..the numbers they reported to employment departments are just ISP numbers..
I believe we will see a big dip into US HC and re-hire in 'emerging markets' (ie India, Malaysia, etc)
Believe they will, Stressful times for the ones left behind. Sorry