Intel’s Plan to Improve Stock Price–Fire People

24/7 Wall St. Insights

• Intel Corp. (NASDAQ: INTC) plans to fire thousands of people to improve margins.
• The company has missed out on the biggest opportunities of the past decade.
• Also: Discover the next Nvidia

Intel Corp. (NASDAQ: INTC) missed out on the massive revenue opportunity from artificial intelligence (AI) chips and products developed by Nvidia Corp. (NASDAQ: NVDA) and AMD. So far this year, Intel’s stock has been down 40%, and Nvidia’s stock is up 109% higher. Intel CEO Pat Gelsinger plans to fire thousands of people to improve margins because he does not have a way out of the hole he has put the company into.

According to Bloomberg, which broke the layoffs story, “Analysts project that Intel will report that second-quarter revenue was flat, compared with a year earlier.” Layoffs will not solve its problems. Cutting costs to drive up margins is rarely a winning strategy.

Last November, Gelsinger admitted to Intel’s significant failures. The hurdle is that they probably cannot be fixed.

The company was too slow to get into the massive phone chip industry. There has probably not been a larger chip opportunity in the past decade. The chance to get a large portion of that market is behind Intel. The company also missed out on the profitable graphics card business. And it also missed out on the chance to be an AI chip manufacturer.

There is some fiction that companies that miss the industry’s largest successes can return and conquer what they lost. For Intel, that is not an opportunity.

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