Intel Corporation’s stock fell more than 7% in after-hours trading. This drop followed shortly after the company shared news that it was cutting its cost of operations and a bleak earnings forecast. The company’s finance chief, David Zinsner, addressed these changes during an interview with CNBC’s Kristina Partsinevelos, emphasizing the need for significant adjustments amid ongoing market pressures.
On the operational side, Zinsner revealed a big operational expense shift. They’ll fall short of the previous goal of $17.5 billion to an anticipated $17 billion this year. He pointed out that this savings can come from staff reductions, specifically from eliminating upper-management jobs. He walked back that figure by explaining Intel has not decided how many employees will be laid off.
Intel’s leadership has undergone substantial changes recently. Pat Gelsinger resigns as CEO in December due to pressure from activist board members and investors. In March, Tan assumed the role on an interim basis. Under Tan’s leadership, the company is looking to reset its strategy and double down on artificial intelligence and other core areas. He brought on Sachin Katti as the new chief technology officer. As chief strategist for AI, Katti will direct Intel’s overall AI strategy and execution, including product release expectations.
In conjunction with cutting operational spending, Intel has lowered its capital spending goal for 2025. The company’s current profit target is $18 billion, reduced from an original projection of $20 billion. Despite the persistent and crushing challenges in the semiconductor industry, Intel has paid a huge price. Consequently, the company registered a net loss of $800 million, or 19 cents a share, for its first-quarter results.
In that interview with Tan, despite all the challenges facing the company, the CEO struck a hopeful tone about Intel’s future path.
“The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth.” – Lip-Bu Tan
As Intel navigates these turbulent waters, the company remains focused on restructuring its operations to enhance efficiency and competitiveness in the ever-evolving tech landscape. The next few months will be key as it moves to realize these changes and hopes to win back investor trust.