Quoteworthy: "They kind of used up all the air in their universe, and they have nowhere to grow." — Kim Forrest, chief investment officer at Bokeh Capital Partner on the end of Wall Street’s “pandemic darlings”
Intel plans thousands of job cuts in face of PC slump
Intel Corp is planning a major reduction in headcount, likely numbering in the thousands, to cut costs and cope with a sputtering PC market, according to people with knowledge of the situation.
The layoffs will be announced as early as this month, with the company planning to make the move around the same time as its 3Q earnings report on Oct 27, said the people, who asked not to be identified because the deliberations are private. The chipmaker had 113,700 employees as of July.
Some divisions, including Intel’s sales and marketing group, could see cuts affecting about 20% of staff, according to the people.
Intel is facing a steep decline in demand for PC processors, its main business, and has struggled to win back market share lost to rivals like Advanced Micro Devices. In July, Intel warned that 2022 sales would be about US$11 billion ($15.8 billion) lower than it previously expected. Analysts expect a 3Q revenue drop of roughly 15%. And Intel’s once-enviable margins have shrivelled: They’re about 15 percentage points narrower than historical numbers of around 60%.
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During its 2Q earnings call, Intel acknowledged that it could make changes to improve profits. “We are also lowering core expenses in calendar year 2022 and will look to take additional actions in the second half of the year,” CEO Pat Gelsinger said at the time.
Intel’s last big wave of layoffs occurred in 2016, when it trimmed about 12,000 jobs, or 11% of its total workforce. Like many companies in the technology industry, Intel also froze hiring earlier this year.
The latest cutbacks are likely meant to reduce Intel’s fixed costs, possibly by about 10% to 15%, Bloomberg Intelligence analyst Mandeep Singh said in a research note. He estimates that those costs range from at least US$25 billion to US$30 billion.
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Gelsinger took the helm at Intel last year and has been working to restore the company’s reputation as a Silicon Valley legend. But even before the PC slump, it was an uphill fight. Intel has lost its long-held technological edge, and its own executives acknowledge that the company’s culture of innovation has withered in recent years.
Now a broader slowdown is adding to those challenges. Intel’s PC, data centre and AI groups are contending with a tech spending downturn, weighing on revenue and profit.
PC sales tumbled 15% in the third quarter from a year earlier, according to IDC HP, Dell Technologies and Lenovo Group, which use Intel’s processors in their laptops and desktop PCs, all suffered steep declines.
With PC prices stagnating and demand weakening, Intel also may need to pursue a dividend cut to offset cash-flow headwinds, Singh said. But Intel’s plan to sell shares of its Mobileye self-driving technology business in an IPO may ease those concerns, he said.
It is a particularly awkward moment for Intel to be making cutbacks. The company lobbied heavily for a US$52 billion chip-stimulus bill this year, vowing to expand its manufacturing in the US. Gelsinger is planning a building boom that includes bringing the world’s biggest chipmaking hub to Ohio. At the same time, the company is under intense pressure from investors to shore up its profits. The company’s shares have fallen more than 50% in 2022, with a 20% plunge occurring in the last month alone.— Bloomberg
Coinbase secures Singapore digital asset permit
Cryptocurrency exchange Coinbase Global has received a digital assets licence in Singapore, as regulators step up vigilance after the high-profile blowups of crypto outfits like Three Arrows Capital.
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The Monetary Authority of Singapore (MAS) has granted Coinbase Singapore in-principle approval under the Payment Services Act to provide regulated services here, the company said on Oct 11. About 15 firms, including rival Crypto. com, have received such permits since Singapore launched the licensing regime in 2019.
Singapore will be a “beachhead” for Coinbase’s planned expansion in the Asia Pacific (APAC) region, where markets like Indonesia and Vietnam are attractive, said Hassan Ahmed, chief executive of its local unit. Coinbase this month unveiled a revamp of its operations in Australia, part of efforts to bolster growth overseas.
“We see Singapore as a strategic market for institutional clients as well,” Ahmed said in an interview. He also pointed to Australia and Japan as “very key markets within the broader APAC sort of region that we’re going to continue to double down on”.
Coinbase has around 100 employees in Singapore, Ahmed said. The firm has been selective about hiring in recent months but is “starting to get a little bit of appetite back”, he said.
Singapore is emerging as a key crypto hub in Asia, with a regulatory regime seen as more comprehensive than that of rival financial centre Hong Kong. But the pace of issuing licences has been slow, with a string of industry upheavals causing the MAS to take a cautious approach to welcoming new players.
Three Arrows, a crypto hedge fund that at one point was based in Singapore, is being liquidated after aggressive bets on digital assets blew up as token prices crumbled.
Hodlnaut, a crypto lender which holds a licence in Singapore, was granted protection from creditors by the High Court in August, after the market rout prompted it to halt withdrawals. At around the same time, the MAS said it is considering restricting retail investors’ use of leverage and credit facilities to trade digital assets.
Coinbase CEO Brian Armstrong is prioritising international growth after cutting almost a fifth of the company’s workforce and reporting 2Q revenue and trading volume that missed estimates. Its shares are down 73% year-to-date, underperforming the MVIS CryptoCompare Digital Assets 100 Index’s 60% decline. — Bloomberg
The Edge Singapore’s Jovi Ho bags Sias’ Most Promising Journalist of the Year award
Jovi Ho, senior writer at The Edge Singapore, has been named Most Promising Journalist of the Year by Sias or the Securities Investors Association (Singapore).
This is The Edge Singapore’s second consecutive win in this category at Sias’ annual Investors’ Choice Awards, which marked its 23rd edition this year.
Ho received his award at an Oct 7 event, with Alvin Tan, Minister of State for the Ministry of Culture, Community and Youth, and the Ministry of Trade and Industry, as guest-of-honour. Also in attendance was former president Tony Tan, chief patron of Sias.
In his award citation, Sias says Ho has covered a wide range of stories at The Edge Singapore, ranging from banks’ earnings to energy security. “[Ho is] a well-rounded journalist with good writing skills and the EQ to deal with all kinds of newsmakers and their public relations gatekeepers,” said Sias.
Ho says: “I would like to thank my editors Chan Chao Peh, Goola Warden, Lee Pang Chuan and our team of copy editors for their help. Thank you also to our CEO Bernard Tong and to my colleagues for their constant support.”
Sias’ Investors’ Choice Awards honour Singapore Exchange-listed companies for corporate governance and transparency.
The winners of this year’s Singapore Corporate Governance Award are Keppel Corp, Del Monte Pacific, PropNex, Stamford Tyres Corp, CapitaLand Integrated Commercial Trust and Singapore Post.
In addition to the established award categories of Shareholder Communications Excellence, Best Retail Broker, Most Transparent Company and Financial Journalist Of The Year, Sias’ inaugural Investors’ Choice Outstanding CEO Award went to Keppel Corp’s CEO and executive director Loh Chin Hua, DBS Bank’s group CEO Piyush Gupta, Marco Polo Marine’s Sean Lee and Sembcorp Industries’ group president and CEO Wong Kim Yin.
Besides Ho, Sias awarded eight other journalists in various categories this year.
Lianhe Zaobao’s senior business correspondent Chew Boon Leong was named Financial Journalist Of The Year, while CNA938’s senior editor Gerard Wong received the award for Financial Story of the Year.
The Straits Times’ senior business correspondent Chor Khieng Yuit, Lianhe Zaobao’s Lai Oi Lai and The Business Times’ Raphael Lim were named Investor Education Journalists of the Year.
Meanwhile, CNA picked up the Media Excellence in Community Investor Education Award, while its correspondent Tang See Kit and The Straits Times’ senior business correspondent Joyce Lim both won the Special Award.
Sias gave out the Best Retail Broker Award too. The winner was CGS-CIMB (Singapore) Securities, while Tiger Brokers (Singapore) and Phillip Securities were named co-runners-up. — The Edge Singapore
