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Actionable news in INTC: Intel Corporation,

INTC, AAPL and FCX: Jim Cramer's Views By Jim Cramer | Apr 25, 2016 | 01:00 AM EDT

Cramer: I Get Why Intel Needs to Lay Off 12,000 People

It's a lot harder to diversify away from personal computers than it is from cell phones.

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That's my takeaway from Tuesday night's difficult Intel (INTC - Get Report) call, where the company raised the speed of decline of its core market for personal computers from mid single digits to high single digits and indicated that it would have to lay off 12,000 people to right-size the company.

For a company with a fantastic balance sheet, a huge and still profitable personal computer business and the best semiconductor manufacturing capacity in the world, Intel still finds itself in a somewhat perilous state. Way too much of its business still comes from the quickly declining Client Computing Group, where it did $7 billion revenues. That's down 14% from the previous quarter on admittedly seasonal weakness, but also only up 2% year over year.

It's hard to wrench out more profitability from that $7 billion, but Intel's hell-bent on doing so because its Data Center Group's 9% growth to $4 billon in revenues isn't going allow for the company to move like a growth company should.

That's the narrative for the layoffs, and I totally get that. It's the right thing to do. Intel has to push aggressively into the cloud, internet of things, automotive and mobile, and it has to do so quickly enough that it isn't whacked again when personal computer demand begins to decline by double digits.

The real issue, though, isn't, at least to me, the cost cuts. It's the acquisitions the company has done, namely the Altera deal last June, when Intel purchased the programmable logic solutions company for $16.7 billion. Intel's Bryan Krzanich was pretty jazzed by the $359 million in revs that brought in, but client computing by contrast just dwarfs it, with that $7.5 billion slug of revenues.

In other words, Altera didn't move the needle, at least this quarter, to diversify away from personal computers.

Now, contrast Intel with NXP Semiconductors (NXPI - Get Report) and Avago, two companies that were almost entirely linked to Action Alerts PLUS portfolio name Apple (AAPL - Get Report) at this time last year. Knowing that Apple's mobile phone business would have to slow, both companies, which were trading in lockstep with Apple, decided to make some pretty huge purchases to diversify from their big dog client.

NXPI shelled out $12 billion for Freescale, which...


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