Intel cuts its workforce by 11% as it releases Q1 financial results

Intel announced its first-quarter 2016 financial results today. The company made $2.6 billion in operating income on $13.7 billion in revenue. Profits were unchanged compared to this time last year, but the company grew its revenue by 7% compared to the year-ago quarter. Net income remained flat at $2 billion, and gross margin fell 1.2 points to 59.3%. Here's a table of the company's results for easy reference:

  Q1 2016 Q1 2015 Change
Revenue $13.7 billion $12.8 billion up 7%
Operating income $2.6 billion $2.6 billion flat
Net income $2.0 billion $2.0 billion flat
Gross margin 59.3% 60.5% down 1.2 points

The company said that it'll be eliminating as many as 12,000 positions worldwide—or 11% of its workforce—by mid-2017 as it transitions from "a PC company to one that powers the cloud and billions of smart, connected computing devices," according to a separate press release. Intel says its growth is coming primarily from its data center and Internet of Things businesses. Those divisions created $2.2 billion in new revenue, accounted for 40% of the company's revenue overall, and delivered the majority of Intel's operating profit last year. The company says growth in those areas is largely making up for the shrinking PC market.

On a division-by-division basis, the Client Computing Group took in $7.5 billion in revenue, up 2% from this time last year. The company says its platform volumes (a figure that accounts for both processors and chipsets) fell 15%, but average selling prices (or ASPs) of its platforms were up 19%. Desktop platform volumes fell 4%, but desktop platform ASPs rose 6%. Notebook platform volumes fell 2% and ASPs were flat. Tablet volumes fell 44%, but the company says ASPs in this segment rose "significantly."

The Data Center Group generated $4 billion in revenue, up 9% compared to this time last year. Platform volumes grew 13%, but data center platform ASPs fell 3%, a figure the company attributes to growth in its networking and storage products. The Internet of Things group took in $651 million, an increase of 22% year-over-year, while the Non-Volatile Memory Solutions Group took in $557 million for a 6% year-on-year decrease. 

For the second quarter, Intel expects $13.5 billion in revenue, plus or minus $500 million. The company projects non-GAAP gross margin in the quarter to be 61%, plus or minus "a couple of points." Intel says it'll communicate news of its workforce reduction to most of its affected employees over the next 60 days.

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