Wall Street stocks drop as Intel announces major layoffs

By Al Mayadeen English
Source: Agencies
2 Aug 2024 17:49

Intel had previously announced a major round of layoffs in October 2022 and planned to cut between $8 billion and $10 billion in costs annually through 2025.

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The New York Stock Exchange is shown on July 10, 2024, in New York. (AP)

Wall Street opened sharply lower Friday morning following disappointing US jobs data, with all three major US equity indices falling over 1%. This drop was compounded by Intel's announcement of substantial job cuts, which sent the tech giant's shares tumbling more than 25%.

Intel's stock plummeted 27.7% within seven minutes of trading after the company revealed its plan to lay off over 10,000 employees and cut $10 billion in costs. The move is said to be part of Intel's strategy to manage declining profits and macroeconomic challenges, as detailed in a memo circulated to staffers on Thursday.

"This is painful news for me to share. I know it will be even more difficult for you to read," Intel CEO Pat Gelsinger wrote to employees.

The decision comes in response to a significant drop in revenue across various divisions, with the company's third-quarter revenue falling 20% year-over-year to $15.3 billion and net income plummeting 85% to $1 billion.

"Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones," said Gelsinger. "Our revenues have not grown as expected — and we've yet to fully benefit from powerful trends, like AI," he added.

Intel had previously announced a major round of layoffs in October 2022 and planned to cut between $8 billion and $10 billion in costs annually through 2025.

Despite this, the company's headcount only dipped by about 5% in 2023, from 131,900 to 124,800 employees. By March 30, 2024, Intel had rehired many positions, bringing its employee count back up to 130,700.

The new layoffs, separate from a 4% headcount reduction between March and June 2024, are expected to be completed by the end of 2024. Intel is offering a "companywide enhanced retirement offering" for eligible employees and allowing applications for voluntary layoffs to make the process less disruptive.

The company also said it is restructuring, suspending its dividend, and cutting back on spending while maintaining core investments to support its strategic goals and develop a sustainable semiconductor supply chain in the US and globally.