Intel Corp. Reduces Workforce

Intel Says Goodbye to 10 500 Employees

by Yaroslav Lyssenko

[ 09/06/2006 | 11:32 PM ]

Associated Press reports that Intel is going to eliminate 10 500 jobs - about 10% of its work force - through layoffs, attrition and the sale of underperforming business groups as part of a massive restructuring.

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The Santa Clara-based company said most of the job cuts this year will come from its management, marketing and information technology ranks, and will expand in 2007 to include manufacturing, design and other segments.

“These actions, while difficult, are essential to Intel becoming a more agile and efficient company, not just for this year or the next, but for years to come,” said Intel Corp. Chief Executive Paul Otellini.

Intel has been under intense pressure to unload money-losing divisions and halt the encroachment of AMD on its lucrative core business. Still, many analysts and investors were expecting higher job cuts and a better-defined strategy for dealing with problem business units.

“This is not nearly as deep or as broad a cut as many had anticipated. They aren’t talking about cutting back any substantial programs. They’re saying, ‘We can still do everything we were planning to do, but now we can do it with fewer people.’ And I’m not certain that’s a workable plan,” said analyst with research firm Insight 64, Nathan Brookwood.

Eric Ross, analyst with ThinkEquity Partners, said the estimated $3 billion savings from the cuts was higher than expected, and could help the company reverse its fortunes.

“They’re going to lose a lot of share, the PC environment is tough, and they’re bloated. But if they can cut costs enough, we’re going to see a different company,” said Eric Ross.

• Associated Press: Intel Corp. to Cut 10 500 Jobs.