Semiconductor chip manufacturer Intel Corporation (NASDAQ:INTC) may see job cuts soon, CEO Pat Gelsinger said in a video call to staff. Further details will be available on November 1, Gelsinger added.
Intel manufactures microprocessors for personal computers (PC) as well as motherboard chipsets, network interface controllers, integrated circuits, flash memory, graphics chips, embedded processors, and other devices related to communications and computing.
The planned layoffs are aimed at improving Intel’s financial condition, which is facing declining demand for its products owing to the sluggish PC market. As of July 2022, Intel had a total of 113,700 employees. “These are always hard decisions, but our costs are too high and our margins are too low… We have to take actions to address them,” Gelsinger said.
Simultaneously, in an effort to shore up its liquidity, Intel has planned to spin off and list its self-driving car unit, Mobileye, for a below $20 billion valuation.
Once hailed as the king of chip makers, Intel has been struggling to maintain its foothold in the semiconductor market lately. Moreover, the pandemic-triggered supply chain snarls and a resultant rise in the demand and price for chips, have now started to fade. As demand slumps, chip makers are feeling the pressure to sustain the expenses and improve profitability.
Intel also has planned capital expenditures to the tune of $20 billion for the ongoing construction of two chip factories in New Albany, Ohio. Intel’s measures to curb expenses are not surprising as several other tech firms have announced a series of layoffs.
Intel is slated to release its third-quarter results on October 27, after the market closes. The Street expects Intel to post an adjusted profit of $0.33 per share in Q3, significantly lower than the prior-year quarter’s figure of $1.71 per share. Meanwhile, revenue is pegged at $15.37 billion, representing a year-over-year decline of nearly 20% but mostly in line with Q2FY22 revenue of $15.3 billion.
Is Intel a Good Stock to Buy?
Now may not be a good time to invest in Intel stock. As mentioned, the company is facing multiple micro and macro hurdles to prove its existence. Also, Wall Street analysts have a Hold consensus rating on INTC stock. This is based on four Buys, 15 Holds, and ten Sell ratings. On TipRanks, the average Intel price target of $35.17 implies 34.8% upside potential to current levels. Meanwhile, the stock has lost 49.7% so far this year.
