Image Source: PexelsIntel received $8.5 billion in Biden administration grants (Inflation Reduction Act) but announces massive layoffs and halts dividends due to a decline in revenue.
Actions to Accelerate our ProgressMy hoot of the day is Intel CEO Pat Gelsinger’s email to employees, titled Actions to Accelerate our Progress
Team,
We have moved our All Company Meeting to today, following our earnings call, as we are announcing significant actions to reduce our costs. We plan to deliver $10 billion in cost savings in 2025, and this includes reducing our head count by roughly 15,000 roles, or 15% of our workforce. The majority of these actions will be completed by the end of this year.
This is painful news for me to share. I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history. When we meet in a few hours, I’ll talk about why we’re doing this and what you can expect in the coming weeks. In advance of that, I wanted to preview some of what’s on my mind.
Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate. Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.
These decisions have challenged me to my core, and this is the hardest thing I’ve done in my career. My pledge to you is that we will prioritize a culture of honesty, transparency and respect in the weeks and months to come. ….
Intel Suspends DividendsIntel reported a 1% decline in revenues for the second quarter compared to the same period last year. Intel attributed the loss to gross margin headwinds related to its Artificial Intelligence (AI) efforts.Intel is suspending dividends starting in the fourth quarter of 2024, and anticipates a “tougher than previously expected” second half.Geisinger said that “Next week, we’ll announce a companywide enhanced retirement offering for eligible employees and broadly offer an application program for voluntary departures.”The more “retirements” Gelsinger can get, the less unemployment will rise.Commercial Construction Spending Is Down 9 Consecutive MonthsEarlier today I noted Commercial Construction Spending Is Down 9 Consecutive Months
Every key component of construction has peaked and is rolling over except for manufacturing.
The latter is due to misguided attempts by the auto industry to roll out EVs and more importantly free money from the Biden administration for autos, chip manufacturing, solar manufacturing, etc.
Commercial Construction a Driver of Job GrowthCommercial construction is only $125.171 billion compared to $939.806 billion residential, $483,850 public, and $2.148 trillion total.However, once houses and roads are built, there are no further directly related jobs. Once stores are built, there are many directly related jobs.Commercial construction is a tiny component of construction spending but a mighty contributor to future jobs once completed.Small Business Employment Growth Is Now Negative
Data from ADP, chart by MishYesterday, I commented Small Business Employment Growth Is Now Negative (and What It Means)
ADP data shows year-over-year payroll growth is negative 88,000 for small corporations sized 20-49. Trends are negative in all but very large corporations.
Actions by Intel are going put a big question mark on hiring by large corporations.Looking AheadIf businesses are not expanding stores and restaurants, then they won’t be hiring to staff those stores and restaurants either.“All Hell Breaks Loose” In the Next Few Months as Recession BitesOn July 25, I commented “All Hell Breaks Loose” In the Next Few Months as Recession BitesTwo of us are still adamant that a recession has started. The other is Danielle DiMartino Booth, in her best video yet.Please take a look.More By This Author:Commercial Construction Spending Is Down 9 Consecutive Months
The Manufacturing ISM Index Is Lower Than Every Economist’s Estimate
Small Business Employment Growth Is Now Negative (And What It Means)
