Menu
Managers and marketing staff in firing line as Intel sacks 10,000

Managers and marketing staff in firing line as Intel sacks 10,000

US

Continuing his quest to stop a slide in profits, Intel Chief Executive Paul Otellini announced layoffs of about 7,500 more people Tuesday. Together with previously announced layoffs of middle-management executives and the sale of two business units in recent months, the actions will reduce Intel's workforce by a total of 10,500 people by 2008 -- about 10 percent of the entire company.

The layoffs will happen in stages. Most job losses that take effect in 2006 have already been announced, including Intel's sale of its media and signaling business in August, the cut of 1,000 executives in July, and the sale of its XScale smartphone chip division in June. Those jobs include workers in management, marketing and IT.

Many more cuts will happen in 2007, when Intel chops jobs in manufacturing and product design, improves equipment use and eliminates other redundancies, the company said.

The total impact will leave Intel with 92,000 people by the middle of 2007, down from the 102,500 it reported in the second quarter of 2006. By cutting these jobs, the company will save US$2 billion in 2007, and $3 billion per year beginning in 2008, Intel said.

The cuts were a dramatic move for a company that holds a commanding 80 percent worldwide market share of PC chips and posted a profit of $885 million in the second quarter. Still, the company could have made more money, illustrated by Otellini's recent prediction that Intel would post profits of $9.3 billion for 2006, down from $12.1 billion in 2005.

The problem came from slowing growth in the PC market, a loss of share to rival Advanced Micro Devices Inc. (AMD), and Intel's move to preserve its market share by making deep price reductions on its chips. In response, Otellini told analysts in April he would "restructure, repurpose and resize" the company over the coming quarter.

Analysts cheered Otellini's move, saying Intel had become bloated. Otellini can use the new cuts to achieve four goals, said Ted Schadler, vice president for consumer electronics research at Forrester Research Inc.

He can eliminate redundant jobs, simplify operations by having fewer products, get out of businesses that don't match Intel's core strengths, and get out of businesses that aren't so profitable, Schadler said.

When Otellini succeeded former CEO Craig Barrett in May 2005, he found there was a huge competitor lurking on his left flank -- AMD -- and he saw a company that was no longer a lean machine, but had grown to fill every nook and cranny, Schadler said.

"So he eliminated middle management, getting rid of 1,000 executives. And now he's using that as a pry-bar into the organization to say 'Who do we really need?'" said Schadler.

"They need to react faster to changing markets. Power [efficiency] is a huge issue, but it took them two years to get a product out the door that was even arguably better. Their road map looks great now, but that's too long."

Since meeting with analysts in April, Otellini has also pushed new chips to market faster, resulting in a raft of new chips in recent months, including the "Woodcrest" Xeon 5100 chip for servers in June, "Conroe" Core 2 Duo chip for desktops in July and "Merom" Core 2 Duo chip for notebooks in August. Intel also reached for the high-end server market with the new "Tulsa" Xeon and "Montecito" Itanium chips.

And with an eye to the future, Intel accelerated the launch of its quad-core chips for desktops and servers, pledging to release them in the fourth quarter of 2006 instead of the first half of 2007.

Intel hopes this flood of new products will stop the erosion of its dominant market share. The company manufactured 77.9 percent of all CPUs sold in PCs around the world during the first quarter of 2006, according to Gartner. That number is down from 80.5 percent in the first quarter of 2005 and 81.5 percent in the first quarter of 2004.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags intelchips

Events

Why experience is the new battleground for partners

Join us for an exclusive webinar, in association with Hewlett Packard Enterprise and Technology Services Industry Association (TSIA) and learn about the latest industry insights and how technology services continue to evolve to deliver differentiated value, and how partners can be successful in 2021 and beyond.

Featured

Slideshows

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

Hundreds of leaders from the New Zealand IT industry gathered at the Hilton in Auckland on 17 November to celebrate the finest female talent in the Kiwi channel and recognise the winners of the Reseller News Women in ICT Awards (WIICTA) 2020.

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards
Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

The leading female front runners of the New Zealand ICT industry joined together for the annual Reseller News Women in ICT Awards event at the Hilton in Auckland, during which hundreds of guests celebrated 13 outstanding individuals who won awards, chosen from more than 50 finalists representing over 30 organisations.

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards
Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

More than 500 channel leaders gathered in Auckland on 21 October at the ​Reseller News Innovation Awards ​2020 to celebrate the achievements of the New Zealand technology industry's top partners, start-ups, vendors, distributors and individuals.

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners
Show Comments