A Dilbert strip from 2004 featured the Pointy-Haired Boss bringing “…a systematic, data-driven focus…” to budget cuts. He then declared, “A death spiral goes clockwise north of the Equator.” And when he said that, he was pointing at “marcom,” or marketing/communications. Sadly, that’s where Intel’s (INTC) latest round of cuts is hitting, and investors took it about like you would expect, sending shares down over 2% in Tuesday afternoon’s session.
We know that Intel has been frantically trying to raise cash via budget cuts and stock sales. Now, reports note that Intel is out to cut costs in its sales and marketing operations by 35%. This will be accomplished with layoffs and a move to “simplify programs end-to-end.”
Despite this, Intel’s sales and marketing arm declared that it was “…deeply committed to the channel and will continue to prioritize the success of the entire Intel ecosystem.” The group declared that the move is “…all about building a stronger Intel for the future,” also noting, “…our partners are integral to our future plans.” It is clear that will be the case, as each of the survivors will now be doing their own work and probably about a third of someone else’s work.
Even Jim Cramer Isn’t Optimistic
That, in turn, led to a much larger potential problem, as famous—or some might say infamous—analyst Jim Cramer offered up recent commentary declaring that the problems at Intel were now out of CEO Pat Gelsinger’s ability to do much about them. Cramer noted, “There is a sense that the company is in much worse straits than we realized.”
And just to top it off, there is also word about the Raptor Lake Refresh chip line that will likely come back to haunt Intel later. The new chips are reportedly using as much as 30% more power than the comparative equivalent from AMD (AMD), and that will likely make a difference to at least some users. Intel does not need things that do not endear it to the customer right now, and this would be one of those.
Is Intel a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 24 Holds, and five Sells assigned in the past three months, as indicated by the graphic below. After a 35.41% loss in its share price over the past year, the average INTC price target of $27.80 per share implies 32% upside potential.
