Intel Cuts Down Employee Wages As The Chipmaker Faces Financial Loss
On Tuesday, 31 January 2023, Intel announced the shocking news of cutting down on employee compensations. The announcement came days after the company reported a wretched financial collapse late last week.
According to the reports released on Thursday, 26 January, it was stated that Intel faced a 32% decline in its quarterly revenue and is also expecting a reduction in sales this winter.
As the news came out, the company’s stock has fallen down sharply since the investors are reconsidering whether or not they’ll be able to deliver the turnaround as agreed upon.
How Much Will Be Cut?
The company announced that the curtailment will be based on the base pay for the employees who are above the mid-level grades by at least 5% and will come to effect from March 1, 2023.
The following information regarding the slashing of revenue came out after the employees let out the announcement given out by the chipmakers.
As the statement released, it is reported that the vice presidents will get a 10% cut, senior executives will get a 15% cut and at the same time, CEO Pat Gelsinger will get a 25% deduction in his base pay.
Meanwhile, the hourly employees working in the company are not included in the pay cut and furthermore, their annual bonuses will also still remain the same.
From the reports, Intel has specifically mentioned that the company will be cutting all the incentives and merit raises that are allotted for all employees very soon.
Also, it is informed that the company has paused the quarterly profit-sharing rewards and employee honoring programs, and even slashed 401(k) retirement plan matching expenses by half, to 2.5%.
In the written statement released by the company on Tuesday, Intel spokesperson Will Moss clearly mentioned that the modifications made by the company are scheduled in order to bring out an impact on the executive population more seriously.
According to him, these alterations will aid much in subsidizing the investments and overall workforce required to boost the modifications and accomplish the long-term strategy.
He even added that the company is very grateful to their employees for their commitment to them and most importantly for the patience they have as the company faces a hard time.
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He reassured the employees that the company is well aware that the latest decision was not as easy as it sounds for everyone.
Sudden Decline In Sales
After the news of the decline in sales was announced, CEO Pat Gelsinger stated in a conference call that the financials aren’t what the company had hoped for, rather the results and outlook of the company are what they wanted or were more concerned about.
But currently, both these are much lower than what they have expected which resulted in the sudden loss. As per the latest estimate, it is reported that Intel, the chipmaker, has acquired $63 billion in sales during the last year which is very much lower than the previous year in which they gained around $76 billion by this time.
He even blamed the unsteady global economy for the company’s poor results. Also, he was alerted in the call that the situation could continue at least till the summer or maybe longer than that.
Recently, the company has lost its technology leadership to other competing chipmakers and has promised to spend billions to boost its analysis and to construct new factories.
As of the reports, it is estimated that Intel faced a 36% reduction in sales in its PC division around the last quarter together with a 33% reduction in its data center group. Moreover, it even lost the market share in both these categories.
Gelsinger stated that the company is confident with the strategic outlook they have for its business. And informed that the company is planning on cutting costs by $3 billion this year through layoffs and other measures.
Until now, the company hasn’t spoken about how many people will lose their jobs as the company is facing a financial crisis.
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