And Intel employees may be in for some bad news. Multiple sources claiming to have knowledge on the topic are talking about an impending layoff, that may leave thousands jobless. Although the sources remained mostly silent on the timeline of the said job cuts, the downsizing may just take place after Intel’s first-quarter financial results. which is expected to be announced this Tuesday.
The layoffs are surprising, because its not as if the company is going through a tough patch. Business is booming and the company was ranked #56 on the 2015 rankings of the world’s most valuable brands published by Millward Brown Optimor, with an estimated revenue of $56 Billion. The company has gross profit margins above 60 percent, and is looking at a sale growth rate of over 5 percent.
With conditions like this, shouldn’t Intel be looking to hire more people? Well, if the company was looking at the short term, then it certainly should. However, when you are a company of Intel’s stature, which was founded back in 1968, talking about short-term doesn’t really make sense.
Looking at the long term, PC sales — which is where Intel’s chips are mainly deployed, are on a downward slope. With people increasingly switching to tablets and smartphones and not replacing their old computers as regularly as in the old days, the company seems to be looking at tough times that may yet be years ahead in the future. Other chipmakers are similarly affected with Qualcomm cutting down its workforce by almost 15 percent.
Another reason may be the increasing competition — a field where Intel has been losing its edge in recent times. The company was the pioneer of electronics and contributed to every single development. However, the cost of developing new technologies is getting steeper by every generation. This has led to Intel slowing down its research a tad, leading to tougher competition.
Such a layoff may also be aimed towards taking some pressure off the company after its recent string of high value acquisitions, including the $16 billion Altera takeover.
Intel had 107,000 employees across the world at the end of last year with almost 20 percent in its Oregon offices alone. A double digit layoff, which is what most sources are forecasting, will leave tens of thousands of people jobless. Such an event, should it occur, will have significant backlash upon the economy of the area. Companies of Intel’s size also support a whole bunch of other businesses in the area — the company is the Oregon’s largest private employer, for example — and a disturbance of this magnitude is bound to shake things around.