The company is taking steps to “fundamentally” streamline the organization.
Things haven’t improved for Intel in the first quarter of this year, revenue remains flat, and losses continue under the new CEO.
In the second quarter, revenues are expected to be between $11.2 billion and $12.4 billion, with 32 cents per share.
Meanwhile, management has announced initiatives to improve execution and operational efficiency, with the hopes of $17 billion in operating expenses for 2025 and $16 billion in operating expenses for 2026.
“The first quarter was a step in the right direction, but there are no easy fixes as we work to get market share and get back on the path to fostering sustainable growth.”
“I take prompt action to improve execution and operational efficiency while ensuring engineers can create great products. We’re back to basics by listening to our customers and making the necessary changes to build a new Intel.”
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David Jinner, Intel’s chief financial officer, spoke in a more positive tone.
“The current macro environment is growing uncertainty across the industry, and this is reflected in our outlook. We are taking a disciplined and careful approach to support our ongoing investment in our core products and casting operations, whilst maximizing operational costs and capital efficiency,” he said.
One of the changes the new CEO is implementing is streamlining the organization, eliminating the management layer, and enabling faster decision-making.
“To maximize the time you spend focusing on your customers, this needs to be fundamentally simplified.”
This allows Intel to reduce costs and focus on what they once did their best. Engineering talent can create superior products, promote greater accountability within the company, and mitigate customer interactions.
For example, the company integrated Network and Edge Group (NEX) into Client Computing Group (CCG) and Data Center and AI Group (DCAI) in the first quarter. We have modified Intel segment reports to improve our operational decision-making process to match this and other business reorganizations.
“We need to go back to our roots and empower our engineers,” Lip-Bu said. “Many of the changes we drive are designed to make engineers more productive by removing the burdensome workflows and processes that slow the pace of innovation.”
At the Consumer Electronics Show in January, the company launched the Intel Core Ultra 200 Series processors for laptops and desktops.
In February, Intel launched a new Xeon 6 processor with performance cores for data centers, as well as a version for network and edge use. This was followed by the release of the latest MLPERF Inference V5.0 benchmark by MLCommons.
While these initiatives may be in the right direction, Intel’s new CEOs have a long way to go before addressing many old issues, including technology failures, declining market share, and poor performance on Wall Street.
This was in the 1980s and 1990s when semiconductor pioneers were doing the right business at the right time, and they worked with Microsoft to create chips that power personal computers. This combination was often referred to as “Wintel.” This is a Windows and Intel shortcut.
The personal computer industry still exists, but it has not grown as much as it was in the early days. As a result, Intel had to reinvent itself and leverage its core capabilities to expand into growing industries such as cloud, 5G networks, AI, intelligent and autonomous edge products. However, it wasn’t fast enough to maintain the old momentum passing through CEOs one after another, including Intel alumni Pat Gelsinger, who was appointed in January 2021 and was taken over by Lip-Bu last month.
Lipbu believes that could happen. “Intel was once widely viewed as the most innovative company in the world,” he said in the letter. “There is no reason not to go back there as long as we promote the changes that are needed to improve.
“It’ll be difficult. It requires painful decisions. But we know what we have to do to better serve our customers when building a new Intel for the future.
Intel shares rose 4.37% to close on April 24th at $21.49.
