Intel Address Spurs Speculation of Layoffs
Intel Corp. CEO Craig Barrett will give a company-wide address at the same time the chipmaker holds its quarterly earnings call with financial analysts this afternoon, spurring speculation that the company may announce layoffs to offset lackluster sales of its PC processors.
Word that Barrett would speak to workers today was first publicly disclosed in a research note sent Monday by analyst Jonathan Joseph of Salomon Smith Barney Inc., in San Francisco.
"We suspect the talk will be to explain possible worker cutbacks, management changes, or it may be simply a pep-talk in tough times," Joseph said.
Intels lower earnings and dropping stock price, which in recent weeks dipped to a five-year low, have fueled speculation that the worlds largest PC chipmaker will have to reduce operating expenses and trim its work force of about 80,000 employees to counter its sagging fortunes.
A spokesman for Intel, based in Santa Clara, Calif., said Barrett will be telling employees largely the same thing the companys senior executives will be saying to market analysts during their earnings call at 5:30 p.m. eastern today.
"This is something he has done from time to time in the past," said spokesman Chuck Mulloy. "Its not a regular thing, but its not that unusual either."
Barrett hosted a similar address to employees about two weeks after the Sept. 11 terrorist attacks in New York and Washington. At that time, Barrett noted the companys earnings have fallen to levels not seen in three years earlier, but that its employment rolls were 20,000 higher than they were then. But despite the clear implication, he did not announce any large-scale layoffs.
However, the companys continued weak earnings have increased pressure on Barrett for further rein in spending.
In recent weeks, several brokerage firms have lowered their forecasts for corporate and consumer high-tech spending through the rest of this year, largely dousing a previously hoped-for industry-wide rebound before 2003.