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Thu, Apr 12, 2001 EDT
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Intel to Cut 5,000 Jobs, Warns of Lower Revenue
By Matthew Fordahl   Associated Press
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SAN JOSE, Calif. — Computer chip-making giant Intel Corp. reduced its revenue estimates for the first quarter Thursday and announced it will be cutting 5,000 jobs — or 6 percent of its work force — during the next nine months, mainly through attrition.

Shares of Intel fell $2.31, or 7 percent, to $30.94 in after-hours trading after rising 31 cents to $33.25 in regular trading on the Nasdaq Stock Market.

The Santa Clara, Calif.-based company expects revenue for the quarter to be down by about 25 percent from the fourth quarter's $8.7 billion.

Previously, it estimated revenue would be down about 15 percent in the first quarter.

Intel blamed the bad news on the economic slowdown, saying in a statement that it continues to affect demand for personal computers and has spread to other sectors, including networking, communications and servers.

Intel earned $3.1 billion, excluding charges, on revenue of $8.02 billion, in the first quarter ended April 1, 2000.

Financial woes have beset all sectors of the high-tech industry, from chipmakers such as Intel to computer manufacturers such as Dell Computer Corp. The effects have been felt by Internet companies, networking firms and software developers.

Intel's news came a day after Internet bellwether Yahoo! Inc. warned that it would not meet earnings expectations. Sun Microsystems Inc., 3Com Corp. and JDS Uniphase Corp. also have issued warnings in recent weeks.

Intel, which has 86,000 employees worldwide, said the 5,000 job cuts would be achieved predominantly through attrition. It did not specify what areas of the company would be affected. But it added the reduction would exclude any additions from future acquisitions.

Last week, Intel chief executive Craig Barrett told developers the company plans to invest heavily in research and development this year.

"You never save your way out of a recession," he told the Intel Developer Forum in San Jose.

The company plans to release its full earnings report on April 17.

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