Chipmaker Intel announces plan to shed 10,500 jobs
By ASSOCIATED PRESS
Published September 6, 2006
SAN JOSE, Calif. - Chipmaker Intel Corp. said Tuesday it will eliminate 10,500 jobs - about 10 percent of its work force - through layoffs, attrition and the sale of underperforming business groups as part of a massive restructuring.
The Santa Clara, Calif., 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.
The cuts are expected to save the company $3-billion per year by 2008. Severance costs are expected to total $200-million.
The world's largest chipmaker is fighting to reverse sinking profits and make it more efficient as it seeks to regain market share stolen by smaller rival Advanced Micro Devices Inc.
"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," chief executive Paul Otellini said in a statement.
About 5,000 of the affected positions have already been cut or will be eliminated this year through a previously announced management layoff, the pending sale of two businesses, and attrition, said Intel spokesman Chuck Mulloy.
The company plans to cut about 2,500 more jobs by the end of the year. The remainder will be shed in 2007, when Intel's head count will settle around 92,000, Mulloy said.
Before the announcement, shares of Intel rose 11 cents to close at $19.99 Tuesday on the Nasdaq Stock Market. In after-hours trading, shares fell 26 cents to $19.73.
Many analysts and investors were expecting higher job cuts and a better-defined strategy for dealing with problem business units, said Nathan Brookwood, analyst with research firm Insight 64.
"This is not nearly as deep or as broad a cut as many had anticipated," he said. "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."
Intel has been under intense pressure to unload money-losing divisions and halt the encroachment of AMD on its lucrative core business making the microprocessors that act as the brains of computers.
Intel has been steadily losing profits and market share. Analysts have criticized it for reacting too slowly after AMD's 2003 launch of the critically acclaimed Opteron and Athlon 64 chips for servers and desktop PCs.
The latest cuts come after three months of streamlining.
[Last modified September 5, 2006, 23:38:00]
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