Name: Intel Laying Off 12,000 Workers
Uploaded: 2019-03-24T06:32:28.000Z
Duration: 3 min 5 s
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Chris Hill: Let's start with Intel. First quarter profits came in higher than expected,

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Simon. That doesn't appear to be the headline, though, because they lowered guidance, and

they are cutting about 11% of their workforce. That is not insignificant.

Simon Erickson: 12,000 jobs, right? This should surprise absolutely no one, because PC shipments

have just been declining year-over-year for the last five years. Hit the peak in 2011,

we've seen year-over-year PC shipments decrease since then, about 300 million shipments last

year. But just like Intel is right in the middle of it, PC chips are less in demand

right now by the global market. So, what do you do? You go out and try to buy growth.

We saw Intel acquire Altera last year, $16.7 billion acquisition. Broadcom did the same

thing with Avago, $37 billion acquisition. You want to expand and get more content with

existing customers, buy another customer list and get bigger. But it's a challenging environment

Hill: We talked about that last year. I remember, because when they bought Altera, we were sitting

in this studio essentially saying, "Sure, they've got the money, but what are they going

Matt Argersinger: Right. And I have to say -- I think Simon is right -- there's just

so much consolidation, the overall pie is shrinking in so many markets. At the same

time, I feel like I've read almost every quarter that Intel is cutting several thousand jobs.

I'm wondering who's left working there at this point? Erickson: Yeah, exactly.

Argersinger: I can't imagine what their workforce is today compared to, say, five years ago.

Erickson: And they're trying to get more and more custom chips. This is not about just

the processors that are in PCs anymore. The Internet of Things, we talked a lot about

that. Autonomous cars are going to need some smart chips in them, too. Altera was making

programmable logic chips, which are custom-designed and able to do very specific things. And the

future of smart devices; it's out there, but it's not there today, that's why you say 12,000

Hill: The stock is up a little bit, and time and time again, we see company X come out,

good quarterly results, they lower guidance, and guidance trumps results and the stock

drops. We're not seeing that today. I'm assuming it's because of the job cuts. Do you think

the optimism in Intel and the management is warranted?

Erickson: I think it's difficult to say today, Chris, because I think demand is going to

be the name of this. Right now, efficiency is the name of the game. You're cutting jobs,

trying to vertically integrate, you're going out and buying growth like we've seen in semiconductor

companies out there. The to-be-determined piece is, is demand going to be what we think

it is out there? There's a lot of demand, like we said, from Internet of Things, smart

devices, all these have semiconductor and processing chips in them. We haven't seen

that demand yet. I think that's the question we have to answer before we can peg the valuations

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Intel Laying Off 12,000 Workers

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