By Tess Stynes 

Intel Corp. said it plans to reduce its global workforce by up to 12,000 jobs, or 11%, as the semiconductor giant seeks to transition away from being a company focused on computer chips.

"These actions drive long-term change to further establish Intel as the leader for the smart, connected world," Chief Executive Brian Krzanich said in an email to employees. The chip maker had a global workforce of 107,300 employees at the end of 2015, according to a regulatory filing.

Intel announced the job cuts and the pending transition of its chief financial officer along with its first-quarter results, which included a lackluster 7.2% increase in first-quarter revenue.

Shares of the Santa Clara, Calif., company recently fell 2.7% to $30.75 in after-hours trading as Intel also lowered its revenue growth forecast for 2016.

For decades, Intel has been the primary provider of chips for personal computers. As PC sales have slowed, the chip maker has focused more on providing the computing power for server systems that act as the backbone for the growth in cloud-computing.

Intel said Tuesday that the job cuts are part of the company's restructuring away from a computer-based company to one that powers the cloud and billions of connected computing devices.

In the first quarter, revenue in Intel's client computing group -- which includes chips for personal computers and mobile devices -- rose 1.7% to $7.55 billion as volume decreased 15% and average selling prices improved by 19%.

In the company's data center group, the area that includes chips for servers, sales rose 8.6% to $4 billion on volume growth of 13%, slightly offset by a 3% decline in average selling prices.

The company said the job cuts include the consolidation of operations globally, along with layoffs and voluntary departures. Intel plans to notify most of the affected employees over the next 60 days, with some actions carrying over into next year.

Intel is aiming to save $750 million this year, with annual run-rate savings of $1.4 billion by mid-2017. The company plans to post a second-quarter charge of $1.2 billion related to the cost-cutting program.

Intel also said its chief financial officer, Stacy Smith, will transition to a new role leading sales, manufacturing and operations, once the company identifies a successor to Mr. Smith, a 28-year Intel veteran. The company has begun an executive search that will include internal and external candidates.

Over all, for the first quarter, Intel reported a profit of $2.05 billion, or 42 cents a share, up from $1.99 billion, or 41 cents a share, a year earlier. Excluding certain items, the company reported per-share earnings of 54 cents. Analysts polled by Thomson Reuters expected per-share profit of 48 cents.

Revenue increased to $13.7 billion from $12.78 billion. The company expected $14 billion, plus or minus $500 million.

Intel reported its quarterly results under a new structure that aimed to break out more details about three of its businesses, including one that includes its recent acquisition of Altera Corp.

Intel said its programmable solutions group, which includes the recently acquired Altera, generated revenue of $359 million in the latest period. The figure doesn't include $99 million of revenue as the result of acquisition-related adjustments, the company said in its news release.

The Internet of Things group, which includes chips for various kinds of noncompeting applications, posted revenue growth of 22% to $651 million.

For the second quarter, Intel projected revenue of $13.5 billion, plus or minus $500 million. Analysts polled by Thomson Reuters expected revenue of $14.16 billion.

For 2016, the company lowered its revenue guidance to growth in the mid-single digits, from its previous estimate for revenue growth in the mid-to-high single digits.

Write to Tess Stynes at tess.stynes@wsj.com

 

(END) Dow Jones Newswires

April 19, 2016 17:26 ET (21:26 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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