Intel Corp. (NASDAQ: INTC) reported it would lay off just over 5,000 people between now and the end of the year. The number is about 5% of its workforce. Intel insists the action is not a layoff. The workers leaving may view it differently.
Intel posted relatively strong numbers for the most recent quarter, and even claimed that the PC market had stabilized. Revenue rose 3% to $13.8 billion. Net income was up 6% to $2.6 billion.
According to CNNMoney, Intel Spokesman Chris Kraeuter said, commenting on the cuts, “This is not a layoff. It’s not a giant, one time action. This is a target employment rate for the end of the year.”
The layoff announcement’s timing did seem odd, if viewed in the context of comments by CEO Brian Krzanich as part of Intel’s earnings press release. He said, “We had a solid fourth quarter with signs of stabilization in the PC segment and financial growth from a year ago.” Recent data from research firms Gartner and IDC show otherwise, at least based on trends in 2013. Gartner reported:
Worldwide PC shipments totaled 82.6 million units in the fourth quarter of 2013, a 6.9 percent decline from the fourth quarter of 2012, according to preliminary results by Gartner, Inc. This is the seventh consecutive quarter of shipment decline.
Perhaps Krzanich sees something not evident to most analysts.
Krzanich’s comments about the PC market gave Wall Street some cheer. Perhaps PC sales are not being battered so badly as in the recent past by the success of tablets and smartphones. Perhaps new innovations from PC manufacturers, or a surge in demand for Microsoft Corp.’s (NASDAQ: MSFT) Windows 8 has driven a modest improvement (although comments from Microsoft would indicate otherwise).
At the end of the day, companies that see their futures as very bright are not usually candidates for employee downsizing. Is Intel in better shape, or not?