As the company struggles with the drop in revenue and earnings, Intel will be cutting salaries across the company in an effort to preserve cash and reduce costs for investments. This will include Chief Executive Officer Pat Gelsinger, as he takes a 25% cut to his own salary.
NEW YORK, NEW YORK - OCTOBER 26: Intel CEO Pat Gelsinger laughs as he prepares to take a photo in Times Square on October 26, 2022 in New York City. Mobileye Global, Inc. celebrated its IPO by ringing the opening bell at the Nasdaq MarketSite. Mobileye is a company developing autonomous driving technologies and advanced driver-assistance systems. The company said that it raised $861 million for its IPO. Michael M. Santiago/Getty Images
(Photo : Michael M. Santiago/Getty Images) NEW YORK, NEW YORK - OCTOBER 26: Intel CEO Pat Gelsinger laughs as he prepares to take a photo in Times Square on October 26, 2022 in New York City. Mobileye Global, Inc. celebrated its IPO by ringing the opening bell at the Nasdaq MarketSite. Mobileye is a company developing autonomous driving technologies and advanced driver-assistance systems. The company said that it raised $861 million for its IPO.
Salary Cuts
Intel Corp. announced on Tuesday that they will cut pay across the company, affecting employees from all departments. Bloomberg reported that CEO Pat Gelsinger is taking a 25% cut, while the executive leadership team will have a decreased 15% pay.
Adding to this, senior managers of Intel will also be included with a 10% reduction and mid-level managers with a 5% decrease. A statement was released by Intel and stated, "As we continue to navigate macroeconomic headwinds and work to reduce costs across the company, we've made several adjustments to our 2023 employee compensation and rewards programs."
These reductions are all designed to impact the executive population of the company to help and support the investments of Intel and the overall workforce needed to improve its transformation in achieving the long-term strategy of the company.
This news comes after a bad outlook from Intel last week after predicting one of the worst quarters in the company's history for 50 years. Intel experienced stiffer competition, and a sharp slowdown in demands for personal computers began to wipe out profits and consume through cash reserves.
CNBC reported that Intel shares closed down 6.4% last week, with a 32% year-over-year revenue decline and a net loss of $644 million for the fourth quarter of 2022. Rosenblatt analyst Hans Moresmann lowered Intel's price target from $20 to $17.
He stated, "No words can portray or explain the historic collapse of Intel, with management attempting to blame a worst-ever PC inventory digestion dynamic and macro/China/enterprise to an over 20% q/q decline in sales."
Despite the setbacks of the company with the economic situation, Gelsinger also plans to invest in the company's future. He expects the company to achieve critical milestones with his comeback plan for the news few years.
This will be his second year as he aims to restore the technological leadership of the company in the $580 billion chip industry. Intel plans to introduce a new production technology at an unprecedented place, with new plants in Europe and the United States to win orders from other chipmakers.
Through this move, Intel will be a competitor with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. These two are the Asian companies that surpassed the rankings of chipmakers by their size and capabilities.
AMD Chief Executive Officer Lisa Sue pledges to keep taking data-center from Intel. Market Watch reported that AMD would keep gaining market share from Intel. She added, "there is some inventory at some of the cloud customers, and so we are expecting a softer first half and then a stronger second half."
