S p reclaims 2100 a lot to look at including coke and yahoo. Europes relatively mixed, oil is lower as the kuwaiti oil strike has now ended. But first up intel announcing plans to cut up to 12,000 jobs, about 11 of the work force, weaker demand for pcs ask that exclusive coming up in just a couple of moments. As we said we brought in jon fortt to lead this interesting quarter and interesting plans now for the future. Its really interesting, carl, because we just saw ibm report a quarter where they talked about weakness in latin america, particularly brazil doing some cuts overseas. Now intel coming in saying the pc market is weak, but also the Data Center Enterprise demand was weak, its cloud demand thats stronger. Makes you wonder overall when it comes to the end user whether that end user is sitting at home or in a business or even at a data center that the business controls, what really is happening to demand for devices that run on intel chips. Of course stacy smith, cfo is going to lead a lot of this charge in manufacturing, operations and now this cost cutting, jim, theyre looking at saving 750 million this year. We really got to go over this because stacy smiths in charge of leading sales, leading manufacturing in the operations, what does that leave . I mean, whats brian doing . Sounds like a ceo job. Right. Now look, this was the quarter where people say why isnt the stock down bigger . The answer is if you take out this many costs and the revenue is good, were still up. Its a very profitable company. And we cant forget that its profitable. But at the same time, jon, you got to be wondering how do they not know pcs were going to go from mid single down to high single down when i think the average viewer knew that . Yeah, what they said was that oems were drawing down inventories, they were more bullish than intel was and the inventory drawdown was therefore more severe. But the shift intel is making through this restructuring suggests that they dont expect big growth to come back. But lets ask the man himself, intel Ceo Brian Krzanich joins us now from intel headquarters in santa clara. Brian, always great to have you. Thanks for joining us. Thank you very much, jon. Good to see you guys. Let me start off with a question about the move with stacey smith who wall street knows very well as cfo for a long time. This looks like the sort of move thats grooming somebody for a move higher, but theres not much higher one can go, especially after what we saw at disney just a couple weeks ago. I think this is an important point to hit, you came into the ceo role with a number two, renay james, shes now left the company, is stacey smith now the number two . I know youre not going anywhere from board perspective, but is this sort of lining him up next in line . This wasnt so much about succession planning as in whos number two and number three, anything like that. This is you know, at intel look at my own career. We really pride ourselves on giving them really wide exposure. He and i had been working for several quarters on what does he do next. And the next natural role was Something Like this. Hed worked in sales earlier in his career. He had been in the finance side of manufacturing earlier in his career. And so actually going in and running those operations made a lot of sense just in his career development. And also gives those segments of the business exposure to his leadership style. So this is just part of the natural how do we develop better leaders, leaders with more scope and more capability. All right. Brian, youre a plain spoken guy, so maybe you can make it clear for me what exactly this restructuring signals about the pc market. It sounds like with the extent of this cut talking 12,000 people relatively quickly, youre looking for an annualized revenue run rate to come down 1. 4 billion, i believe, by next year. Are you now in effect saying youre not expecting growth to come back to the pc market at all . Not expecting it to tank. Its going to continue to help fuel areas that you do expect to grow. But intel even more than youd said before away from being a pc company . You know, you actually captured the main point of this, jon. This is about accelerating that change. And actually taking the pc and being realistic about, hey, its, you know, going to be down in that mid to high Single Digits yeartoyear. It will bottom out at some point, but what we really need to do is operate efficiently and maximize the profitability in that time. And so this is about doing that while shifting and accelerating faster into those growth areas. Now, weve talked about the data center, the internet of things, memory and fpgas. Those were all great quarters. Those were all quarters where they all grew this quarter, quite nicely. Iot up 22 year over year, data center up almost 10 year over year, thats a great result. And thats a growth company. So were going to accelerate in those areas. Actually invest more as a part of this. Brian, jim cramer, i actually hear you on the iot, 22 growth, thats great. But its only 651 million revenues. I understand completely the acquisition but its only 359 million in revenues for this quarter. I look at what annex pi did, i look at what ivago did and now broadcom. I know you like the connected core, i know you like internet of things, is it not time to do one more acquisition . You did that deal when your stock was at 34, your stock is now at 31. Evago their stock is now up 30 points. A lot of people thought they paid too much, must you make with additional money another acquisition to build up internet of things and build up programmable . Well, i think on programmable and fpga we bought the best asset in the industry. And i think weve done a great job of integrating that in. Jim, i want to make a very clear point, not only did they beat their quarter, but weve really started to accelerate their products for this year. And we actually have shipping now the first zion and fpga copackaged part into sampling customers now. We do need to continue to grow. Data centers about a 2. 5 to 3 billion a year business. Growing at double digits. We will probably go in and make more acquisitions. What those will be were still trying to figure out exactly what they are. But remember the data center is a 16 billion business. And thats growing double digits as well. So i believe the growth engines are there. We have the right structure. Well grow both organic and, yes, there will be some inorganic. Is this kind of a moment like what andy grove had to do in the 80s and said we need to be number one, were not going to be number one in d rams, were going to shutter, move all the way, everyone laughed and turned out to be a brilliant move. So you have stacey smith, maybe he runs old intel, new intel, internet of things, new intel auto, new intel the super computer of cars. We get this logic, one grows slow but a lot of cash, another grows really fast and where you put the assets. Well, i dont know if stacey smith is old intel. Still the core of the business but you are right in theres becoming two segments of intel. There is the segment around the client that is tending to be a bit more stable but has a lot of profitability and a lot of ability to fuel growth for the other segments. And theres the new segments that were going to move into and accelerate at a faster rate. And those are the data center, memory, iot, fpgas, i believe those can become as big or bigger than the pc over the next few years. In the size of their businesses. And equally as profitable. Brian, you talk about pcs eventually bottoming out, but how much pain is between there and here . And is there any argument that holds water that pcs face some kind of existential threat where they are truly going away so to speak . You know, where theyll bottom out im not exactly sure. That would be a great ability to predict that. I dont think theyre going to go away. I mean, all of us including all of you guys right there onset are using pcs and i think will continue to use pcs. Pcs will continue to transform. We have a lot of Great Innovation still yet to come on the pc. But i do think that what youre going to see is, you know, kind of a transformation of intel as a business in that theres a lot of profitability. You know, even in a declining pc market we grew profitability over the last couple of years in the pc segment. So this effort is to continue that profit blgt while bringing the right innovations. While we shift that spending over into these growth areas, data center, iot, memory, the other areas. Mr. Krzanich, youre going to be roughly doing away with some 11 of your employees, can you give us an awe assurance as to why thats first let me say thats a difficult decision. Those are friends ive worked with for many, many years. So its a difficult decision to make. But what we did was look at the programs we wanted to implement, and theyre really broken into a few segments. Theres performance related and choice related voluntary separations and involuntary separations, theres some site closures, we have acquired a lot of buildings and a lot of locations all over the world, a lot of them through acquisitions that have now become isolated and were going to try teams that are colocated work much more efficiently. And then theres projects that were going to become more efficient on and or they have not had a return or show a return in the future and so were going to close those down. When we added all those up, when we looked at it and then we subtracted the investments we wanted to make in those growth areas, the number came out around that 12,000 number. So it was really a mixture of what actions do we want to do to drive the company to be more efficient balanced against where do we want to spend money and how do we want to accelerate the change and the growth areas. And when we did that it came out to that 12,000ish number. You know, there are any number of companies in the past in your market that do a series of layoffs that identify a number as you have but then come back to it a year and a half later and say, you know, weve got to do more. Do you expect this is going to be it in terms of the layoffs that take place at intel . You know, thats certainly the plan. You know, if we take a look at this at the end of this effort intel will have, if you measure by say revenue per employee, the most efficient or the highest revenue per employee in the history of the company. And so weve really tried to look at this as how do we become the most efficient we are, how do we be realistic as we said about where the pc is going, still keep investments in the pc and the right locations, places like two in one, the thin and light devices, theyre growing at a good rate, gaming pcs are growing at a fantastic rate. We are continuing to gain share in the set top box market and those are more and more same technology as a pc. Were going to invest in those areas. But we are going to manage investments in the other segments that maybe arent growing or actually shrinking. Weve tried to scale this such that this is the one time that we need to do to really push this acceleration over. You know, you mentioned is this like the grove effort when we really went from memory to the cpu. It is in that we are making the shift. We are going to push over the edge. But whats different and actually better here is were not having to exit. We still have a very profitable engine in the pc. And were going to actually make it more profitable while we fuel the growth in those other areas. Brian, it sounds like youre saying on pcs you mentioned two in ones, thin and light gaming pcs, those are the higher end models that really its the lower end and maybe the bottom of the mid range thats not performing that shrinking. Amd used to really operate in that area. You guys have largely dominated them in that category as well. Whats going to happen to the low end pc if you guys arent going to invest there . And does this also mean that the marketing dollars that you guys had been contributing to oems in that area that those are going to either go away or be dramatically depleted . So a bit of your comment is spoton. The growth areas interestingly enough are tending to be those higher end pcs, the gaming pcs, the high end enterprise and consumer pcs are doing quite well. The thin and light devices that people want to use on the go. Youre right in that the areas that are flat to down are tending to be those mid to lower level systems, both laptops and desktops. That doesnt mean that were not going to continue to support them or bring in new innovations. Its were going to scale that innovation relative to the growth. So well slow it down. Well as far as the amount of innovation going into those segments, but were still going to support them absolutely. And just be realistic about where those are headed. Tell me again about data center. We hadnt talked that much about that. It seemed like you were saying that the strength in data center was more on the cloud end, your amazons, your facebooks, your microsofts, big buyers that have come to define this era in data center. Enterprise was actually weaker. Is this something thats just a blip . Or is it indicative of this larger trend of enterprises not buying their own hardware and shifting their focus to the cloud . So, jon, i think its a bit of both. Theres definitely a correlation between the enterprise and gdp and, you know, overall macro economics. So we see when gdp is slowed we see the enterprise segment of all of the data center be the one most effected. Theres a certain amount of it thats tied to macrmacroeconomi and gdp. But youre right theres also a move to the cloud and the public cloud thats going on. So you are seeing that although the enterprise is still the largest segment of the Data Center Business for us, its growth has slowed down quite a bit. Its still growing though. So i always want to be careful. Its not that this is not a growth business, its just slowed down. The data center has the cloud portion of the data center is growing at more than 20 though. And it is one of the but i want to remind people there are other areas, there are other parts of the footprint of the data center. Theres networking, theres storage. Networking is now the Fastest Growing segment as a percentage of our Data Center Business. And were still a relatively small market share percentage in that space. So theres a lot of headwind for us to continue to grow. And its lined very nicely with the strategy that we have in the data center. Brian, jim you take all of those, we think theres a lot of growth in the data center. You know, i get confused sometimes. I mean, for instance, security up 5 , 12 year or yooef over, thats a great part and you dont mention it. And then chinas weak and thinking maybe chinas more important than i thought. Just these little nuggets you put in the call. Now im really worried about china. Maybe china is falling off a cliff. Well, china if you take a look you got to kind of look at it by segments, jim. Pc, china was definitely the area of the largest part of the weakness that we saw in the pc segment. But if you look at the data center, china was right on target and did very well. So, again, you see this by segment how are things being effected. And i think its the difference between what areas are growing and even with the existing devices did people want to store more data, go to more cloud environments. Thats going to grow no matter what versus people going out and buying new devices. And whether those devices are phones, pcs, tablets, whatever, you know, we saw that china was a bit weaker than the rest of the world. Youre right, security was a great business for us. Fpgas were a great business for us. We try and mention all of those. It was in my statement on earnings about the growth of the security business. Weve done a great job there, jim, really focusing down, focusing on where were good at security and getting that business back to growth. All right. Brian krzanich, you covered a lot of ground for us going through the pc market, data center, those other segments and of course those layoffs that are going to come with the restructuring that you hope to execute over the next year saving 1. 4 billion annually. Thanks so much for joining us exclusively on squawk on the street. Thank you guys. Thanks to you, jon, for bringing it to us. When we come back, shares of coke falling despite an earnings beat. Stay tuned for a live interview with their c. O. O. 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