Intel says that getting rid of employees faster than expected has contributed to Q3 business being within expectations and the company has forecast a better second half for processors.
The company said earlier this year that it would reduce its 87000 headcount by 5000. As the company gave an update for Q3, due to end 29 September, Andy Bryant, executive vice- president and chief financial and enterprise services officer, said: "We are making exceptional progress in headcount reduction, expense control and product cost.
"Employee count is turning down more rapidly than expected, leading to reduced spending in both cost of sales and operating expenses."
Expenses of between $2bn and $2.1bn would be slightly lower than the earlier forecast of between $2.1bn and $2.2bn earlier projected.
Bryant says each of Intel's businesses is performing as expected in revenues and gross margins, and better than expected in operating margins. Q3 revenues will be "slightly below" the midpoint of the $6.2bn-$6.8bn range given in July.
The microprocessor business is showing higher strength in the second half than the first half — seasonal unit growth — but because of price movements, revenue growth is not higher.
The flash and networking products group will see flat revenues on the previous quarter. Neither are seeing revenue growth and Intel expects a later and slower recovery and return to profitability than the microprocessor segment.
But Bryant said: "What we are seeing is inventories starting to approach normal levels in the cell phone industry."