Intel CEO Paul Otellini send out a memo to Intel employees to inform them about the harsh times the company is facing. Last quarter Intel faced a dramatic 90 percent drop in net income, and Otellini warns the company may see its first loss in the first quarter of the year after 87 straight quarters of profit.
As demand for computers is falling off a cliff, Otellini warns things aren't going to be rosy again in six months and that the first quarter will be "too close to call". Intel is reportedly assuming a revenue of around $7 billion this quarter, which would be a 28 percent decline from a year ago.
Intel’s failure to give an official forecast was the first time that had happened in Otellini’s 34-year career at the company, according to the memo.
There will be no budget for merit pay or promotions, and Intel will only refill vacant jobs on a selective basis, Otellini said in the memo. He said he has received e-mails from employees saying they would rather take pay cuts than lose a job or see co- workers terminated.
“We will be focusing on every nickel,” Otellini said in the memo. “Every dollar counts.”
While the company will maintain its investments in future technologies, it plans to cut discretionary spending and slow down factory production. That will force the closure of some sites and cause manufacturing workers to relocate.