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Intel Profit Drops 36%; 3,000 Job Cuts Planned

April 15, 1998|From Associated Press

Computer chip giant Intel Corp., stung by weakened demand, said Tuesday that it will cut 3,000 jobs, in its broadest staff reduction in a decade.

Intel made the announcement as it reported depressed first-quarter earnings, as expected. The Santa Clara-based company said it earned $1.27 billion, or 72 cents a share on a diluted basis, in the three months ended March 28. That was down 36% from $1.98 billion, or $1.10 a share, in the year-ago quarter.

The results, which include a one-time charge of 9 cents a share, matched analysts' lowered estimates. Intel also said that revenue fell 7%, to $6 billion from $6.45 billion. And it warned that sales will be flat to slightly lower in the current quarter.

The job cuts announced Tuesday amount to about 5% of the company's 63,000 workers. Intel said it will try to avoid laying off workers and instead reduce its payrolls by attrition over the next six months.

Intel has been hurt by swelled personal computer inventories and by consumers' growing preference for low-cost PCs.

In addition to cutting jobs, Intel said it will trim its capital investment for the year.

The company's announcements were made after markets closed Tuesday. The stock eased 25 cents to close at $76 on Nasdaq.

At a Glance:

* Scotts Valley-based Seagate Technology Inc. reported a third-quarter loss on falling prices and weak demand for its computer disk drives. After the market closed, Seagate posted a net loss of $128.5 million, or 53 cents a share, contrasted with net income of $256.8 million, or $1.01 a share, a year ago. But excluding restructuring charges, Seagate would have lost 10 cents a share, meeting analysts' estimates. Seagate shares surged $4.19 to close at $29 in after-hours trading.

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