The semiconductor giant’s stock sank nearly 30 percent on Friday, the day after announcing a 15 percent workforce cut and other cost-saving measures, including the suspension of dividends.

Shares of semiconductor giant Intel Friday plummeted nearly 30 percent a day after the company unveiled major moves to cut costs, including a massive layoff of roughly 15,000 of its employees, as a way to recover growth.

Since the announcement on Thursday, Intel has lost roughly $26 billion in market cap, with the company’s total market value standing around $95 billion as of Friday.

The news of the cuts, along with dropping its guidance for the upcoming quarter, hit investor confidence hard. The company’s stock fell in after-hours trading Thursday, and opened the trading day Friday at around $21, where they hovered throughout most of the day, down about 27 percent or $8 per share.

[Related: ‘Painful News:’ Intel Plans To Lay Off 15,000, Cut $10B In Costs]

As a result, Intel Friday saw its biggest drop in its stock price since 1974, and the stock is the lowest since 2013, according to CNBC.

The planned Intel layoff of 15,000 employees is also the largest tech layoff since 2020, and surpasses the record set by Google in early 2013 when it laid off 12,000 employees, according to U.K.-based Business Financing.

Guiding Down

The operational and capital improvements Intel is driving will be especially important as the company manages the business through the near term, Intel CEO Pat Gelsinger Thursday told analysts during the company’s second fiscal quarter 2024 financial analyst conference call.

“While we expect to deliver sequential revenue growth through the rest of the year, the pace of the recovery will be slower than expected, which is reflected in our Q3 outlook. … Our outlook reflects industry-wide conditions without any meaningful change in our market share information,” Gelsinger said. “As we looked at the Q4 normal seasonal revenue growth has historically been in the range of flat to up 5 percent quarter over quarter. With improved client inventory levels exiting Q3. We see Q4 revenue at the high end of that range.”

For Intel’s third fiscal quarter, the company expects revenue to be between $12.5 billion and $13.5 billion. This compares to the $14.6 billion Intel reported for its third fiscal quarter 2023. This is also lower than analyst consensus guidance for the third quarter of $14.4 billion, according to MarketBeat.

Intel also expects to report a GAAP loss of 24 cents per share and non-GAAP loss of 3 cents per share, down significantly from last year’s GAAP earnings of 7 cents per share and non-GAAP earnings of 41 cents per share. Analysts had been expecting third fiscal quarter earnings of 31 cents per share, according to MarketBeat.

Looking To Cut Costs

Gelsinger said lower-than-expected growth in the second fiscal quarter was due in part to the unexpected timing of new export control restrictions announced in May as well as the company’s decision to more quickly ramp Core Ultra AI CPUs, along with other actions the company took to improve its position going forward.

“We previously signaled that our investments to define and drive the AI PC category would pressure margins in the near term,” he said. “We believe the tradeoffs are worth it. The AI PC will grow from less than 10 percent of the market today to greater than 50 percent in 2026. We know today’s investment will accelerate and extend our leadership and drive significant benefits in the years to come.”

Intel looks to improve its financial performance via the company’s new cost reduction plan, which was unveiled along with the company’s second fiscal quarter financials, Gelsinger said.

“This plan represents structural improvements enabled by our new operating model, which we are pulling forward to adjust to current business trends,” he said. “Having separate financial reporting for Intel products and Intel Foundry clarifies and focuses roles and responsibilities across the company and also enables us to eliminate complexity and maximize the impact of our resources. Taking a clean sheet view of the business is allowing us to take swings and broad-based actions beginning this quarter.”

As a result, Gelsinger said, Intel expects to drive a meaningful reduction in spending and headcount beginning in the second half of 2024.

“We are targeting a headcount reduction of greater than 15 percent by the end of 2025, with the majority of this action completed by the end of this year,” he said. “We do not take this lightly. We have carefully considered the impact this will have on the Intel family. These are hard but necessary decisions.”

Intel’s layoffs, combined with other actions, are expected to reduce 2024 capex to approximately $20 billion and 2025 opex to $17.5 billion, which Gelsinger said is over 20 percent below prior estimates.

“We expect further benefits in 2026, with opex to decline in absolute dollars yet again,” he said. “Even as we lower overall spending, we will continue to fund the investments needed to deliver our strategy.”

Intel’s new operating model is also driving benefits to the company’s capital requirements, providing the transparency to more rigorously scrutinize every project and every dollar of capital, Gelsinger said. As a result, Intel now expects 2024 gross capex to be between $25 billion and $27 billion, or over 20 percent below the company’s plan entering the year.

However, thanks to Intel’s strong execution its Smart Capital Strategy to bring in outside investment in chip fabrication, including its relationship with Apollo Global Management, the company expect net capital spending in 2024 of between $11 and $13 billion, he said.

The cost reduction plan will carry forward to next year as well, Gelsinger said, with 2025 gross capital spending is targeted between $20 billion and $23 billion, and net capital spending between $12 billion to $14 billion. The company also plans to cut roughly $1 billion in savings and non-variable cost of sales in 2025.

“Once again, these reductions do not impact our ability to execute our plan,” he said. “We designed our Smart Capital Strategy to enable us to conservatively manage the day-to-day business to trend line growth while maintaining the operational flexibility to quickly and cost-effectively capture upside when it comes.”

Intel will also suspend its dividend starting in the fourth quarter to prioritize liquidity to support the investments needed to execute its strategy, Gelsinger said.

Intel By The Numbers

For its second fiscal quarter 2024, which ended June 29, Intel reported total revenue of $12.84 billion, down 1.0 percent from the $12.95 billion the company reported for its second fiscal quarter 2023.

Revenue missed analyst expectations by $150 million, according to Seeking Alpha.

On the Intel products side, that included client computing revenue of $7.41 billion, up from last year’s $6.78 billion; data center and AI revenue of $3.05 billion, down from $3.16 billion; and network and edge revenue of $1.34 billion, down from $1.36 billion.

On the Intel Foundry side, the company reported revenue of $4.32 billion, up from $4.17 billion.

For the quarter, Intel reported a GAAP net loss of $1.61 billion or 38 cents per share, a significant change from last year’s net income of $1.47 billion or 25 cents per share. On a non-GAAP basis, Intel reported net income of $83 million or 2 cents per share, down from last year’s net income of $547 million or 13 cents per share.

Intel’s non-GAAP earnings missed analyst expectations by 8 cents per share, according to Seeking Alpha.