Santa Clara, California-based Intel Corp. (NASDAQ: INTC -$32.06) said it plans to reduce its global workforce by up to 12,000 jobs, or 11%, as the semiconductor giant seeks to transition away from being a company focused on computer chips. Intel also said that it will restructure operations to speed its transition to a company that powers the cloud and billions of smart, connected computing devices. For the first quarter, Intel reported an adjusted profit of $0.54 per share on revenue of $13.7 billion, up from $12.78 billion last year. Analysts expected per-share profit of $0.48 and revenue closer to $13.99 billion. Revenue in Intel’s Client Computing Group, which includes chips for personal computers and mobile devices, rose 1.7% to $7.55 billion as volume decreased 15% and average selling prices improved by 19%. In the company’s Data Center Group, the area that includes chips for servers, sales rose 8.6% to $4 billion on volume growth of 13%, slightly offset by a 3% decline in average selling prices. The Programmable Solutions Group, which includes the recently acquired Altera, generated revenue of $359 million in the latest period. The Internet of Things Group, which includes chips for various kinds of noncompeting applications, posted revenue growth of 22% to $651 million.
The current share price reflects an attractive valuation and a belief that fundamentals will improve through 2017, despite periods of unevenness. The stock offers good risk-adjusted total return potential for the pull to 2019-2021. Intel pays a well-covered, and steadily increasing, dividend – yielding 3.3% – that adds a degree of support to its shares.