Intel profit slides on costs related to layoffs

Intel CEO Brian Krzanich
Intel CEO Brian Krzanich speaks at an Intel IoT event in San Francisco on Nov. 3, 2015 Credit: James Niccolai

Sales were up in its data center division but down in client computing


Intel's profit dropped sharply last quarter due to heavy costs from a restructuring announced in April, though sales were up thanks to the company's powerful data center group.

Intel's profit for the quarter, ended July 2, was $1.3 billion, down from $2.7 billion a year earlier, the company announced Wednesday. Revenue climbed 3 percent to $13.5 billion.

Intel said in April that it would axe 12,000 jobs worldwide, or 11 percent of its staff, in a plan to cut costs and focus on growing businesses like server processors and chips for the internet of things.

In the process, it canceled the development of low-power Atom processors and more or less gave up on the smartphone and tablet markets -- areas where it's never done well.

As a result of those changes, Intel said Wednesday it recorded restructuring costs of $1.4 billion, which is what caused its profit last quarter to fall.

Results elsewhere were mixed. Revenue from Intel's data center group, which sells Xeon server chips, were up 5 percent from last year, to $4.0 billion.

However, revenue from its client computing group, which makes chips for PCs and mobile devices, was down 3 percent to $7.3 billion, Intel said.

Its IoT group produced sales of $572 million, up 2 percent year over year.

On an adjusted basis, factoring out the restructuring costs, Intel's earnings came in at $0.59 a share, better than the $0.53 analysts had been expecting. The revenue figure was roughly on target.

“Second-quarter revenue matched our outlook, and profitability was better than we expected," CEO Brian Krzanich said in a statement.

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