Intel Corp. (INTC - Free Report) intends to reduce its global workforce of 107,000 by 5%. This means that the job cuts will be more than 5000. The company did not mention the locations that would be affected, but it did say that the jobs trimming may comprise retirements, discretionary programs and other options.
Intel, the largest manufacturer of chips, is facing problems due to the fall in sales of personal computers. Intel might dominate the PC chip industry, but it faces difficulties in making processors suitable for smart phones and tablets.
It is therefore trying to lower its operating expenses and concentrate more on the areas that would grow faster. This will likely have a positive impact on its earnings.
Intel reported its fiscal fourth-quarter results last week. Net income for the quarter was up 6%on revenue that grew 3%. Even though the net income and revenue rose, worldwide sales of PCs fell by 7%.
According to Gartner, the world’s leading IT research and advisory company, PC shipments declined 6.9% on a year over basis to 82.6 million units in the fourth quarter of 2013.This is the seventh consecutive quarter of shipment decline.
Moreover, companies like Hewlett-Packards Co. (HPQ - Free Report) and Dell are also undergoing internal restructuring, in order to combat the losses due to the fall in worldwide PC sales.
Intel also faces challenges due to its late execution in the mobile segment and from competitors like Advanced Micro Devices, Inc. (AMD - Free Report) .
Currently, Intel Corp has a Zacks Rank #3 (Hold). Investors interested in the technology sector can also consider Western Digital Corp. (WDC - Free Report) , which carries a Zacks Rank #1 (Strong Buy).