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Intel Feels Pinch, Cuts Jobs and Revenue Forecast

Chip giant blames general slowdown for 25 percent earnings drop, decides to cut 5000 jobs.

By Ashlee Vance, PCWorld   

Intel becomes the latest victim of a slowing U.S. economy, announcing it will drastically reduce its workforce, and slashing revenue expectations for its first fiscal quarter.

The chip behemoth will cut 5000 jobs over the next nine months as part of an effort to offset lagging revenues, the company says in a statement issued Thursday afternoon.

The chip giant expects revenue for its first quarter to fall 25 percent from the immediate prior quarter, when revenue was $8.7 billion. Intel had previously indicated that first-quarter revenues would be down 15 percent from the prior quarter.

Research and Development expenditure will also be cut 15 percent from the prior quarter's total of $2.4 billion, company representatives say.

Intel cites less demand for processors used in servers as the main reason for the revisions. However, the vendor also says it is experiencing slower demand for networking, communications, and server products.

Intel is due to report its first-quarter financial results on April 17.

Intel has met the same fate as some of the technology industry's other large players. Other companies to announce layoffs in recent weeks include Nortel Networks, Dell, and Toshiba.

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