Business Downturn Forces Cutbacks

Longtime chipmaker Intel had a poor Q2 earnings report and its forecast is not much better, if at all.

On the earnings news Intel’s stock dropped 26% for its worst drop in decades and shedding $30 billion off the company’s market capitalization as the company struggles to cut costs.

Pat Gelsinger, Intel CEO, and other execs say they thought they had turned the corner after years of poor sales and hitting bottom last year but they were caught off guard again with the earnings report.

This comes as the company is even now undergoing a $10 billion cost-cutting program that has seen layoffs of 15% of its workforce, eliminating employee perks, slashing capital expenses, and even suspending the dividend for stockholders.

This week, Gelsinger announced the shutdown of its corporate air shuttle, commonly referred to as “Intel Air” and operated for decades moving employees around to its West Coast facilities. The shuttle has four aircraft in its fleet including two Embraer E145s and two E175s. Intel has hangars at Portland-Hillsboro (KHIO), Phoenix Mesa Gateway (KIWA), Sacramento Mather (KMHR), and also operates flights to San Jose International (KSJC). The four aircraft are operated by GMJ Air Shuttle using the call sign “High Tech.” GMJ is part of Florida-based XO Jet and operates under Part 125 rules.

Christy Pambianchi, Intel’s human resources chief told employees, “We really aren’t in a situation where we could continue to afford benefits and programs that are above market practice.”

FMI:  www.intel.com/