Intel’s Massive Makeover Slashes Workforce and Scraps Factory Dreams

When you’re bleeding $2.9B in quarterly losses, sometimes drastic times call for drastic measures. As Newcomer CEO Lip-Bu Tan remedies Intel’sINTC

struggles, he’s trimming staff and abandoning major expansion plans. Under his leadership, the chipmaker’s $10B cost-cutting initiative aims to restore its former glory against NvidiaNVDA

and AMDAMD

.

• Tan admitted his first months on the job had “not been easy,” asINTC
  moved to cut 15% of its workforce — shrinking headcount from about 108.9K to 75K by year’s end.
• “There are no more blank checks,” he said while winding down factories in Germany, Poland, and Ohio — announcing “the company invested too much … without adequate demand.”

The payoff: Despite the grim news,INTC

surprisingly posted strong Q2 results, indicating underlying business strength. Having previously touted deals with MicrosoftMSFT

and AmazonAMZN

, the foundry posted $12.8B in revenue and raised its Q3 forecast up to $13.6B — beating Wall Street’s expectations on both fronts. Still, with a surprise billion-dollar writedown sending its stock plunging 8.5% Friday, sometimes even good news gets chainsawed by an EPS miss.