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Intel expected to cut thousands of jobs
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July 19, 2006
As first reported by CNET News.com, the layoffs primarily hit the marketing and information technology departments. The company said it will have 10,500 fewer employees by mid-2007, as compared with its headcount at the end of this year's second quarter.
The company hopes to save $2 billion in annual costs by knocking 10,500 employees off its payroll. That number includes several layoffs and divestitures already announced by the company, including the pending departure of 1,000 managers, and the sale of its communications unit to Marvell. Intel also sold some telecommunications assets to Eicon. About 2,000 employees were involved in those transactions.
Including those layoffs, divestitures and its normal rate of attrition, Intel has already shed 5,000 positions, said company spokesman Chuck Mulloy. The remaining 5,500 cuts will bring Intel's headcount down to 92,000 by the second quarter of 2007, and cost Intel $200 million in severance pay, he said.
"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," Intel CEO Paul Otellini said in a press release announcing the move.
The cuts will be focused on the previously mentioned departments in 2006, but will also expand to a broader base of Intel's population over the course of 2007, the company said. By 2008, Intel hopes the annual cost savings will reach $3 billion.
Intel wants to increase the ratio of marketing employees who work directly with its customers, as opposed to internal employees, Mulloy said. The company will also look to improve the efficiency of its manufacturing operation. By next year, Intel will start looking to other areas, including human resources and other departments, as it works its way down to 92,000 employees, he said.
Intel has been hurt by inroads made by its chief rival, Advanced Micro Devices, which has taken market share from the company in the desktop PC and server categories. AMD now owns 26 percent of the server market, compared to virtually nothing before its Opteron processor arrived in 2003, and it thinks it can reach 40 percent of that market by the end of the decade.
As a result, Intel's financial performance this year has disappointed investors. The company's profits have fallen as it has tried to shore up its market share with price cuts. Intel is pinning its hopes on a new generation of products based on a more energy-efficient blueprint that appears to outperform AMD's chips in several categories.
Intel is hoping that its restructuring and layoffs will have the same result that Hewlett-Packard's 15,000 jobs cuts had on that company's results, said Roger Kay, an analyst with Endpoint Technologies Associates. HP's profits have returned just over a year after it downsized, and its stock price has also improved.
"This is the other shoe dropping," Kay said. Intel's partners and customers will at least have the uncertainty removed from their dealings with the company, which is no consolation to the Intel marketing employees about to learn their fate, he said.
Intel's marketing department has already gone through several disruptions this year. In July, the company announced that its two primary marketing and sales executives, Eric Kim and Anand Chandrasekher, were being assigned to other positions within the company. Sean Maloney was named the sole head of the sales and marketing group at that time.
See more CNET content tagged:
layoff, divestiture, Intel, cut, AMD Opteron
The stock market will continue to fluctuate. So what will you do in case you are left holding a pink slip like these 10,000 people?
The best time to have a backup plan is when you don't need it. If you are feeling safe and secure then now is the time to start preparing. At least that's my advice. I'm no expert. I've just seen too many people hit like this and if they had only prepared for it they would obviously have been a lot better off.
I'm just glad I found a way where I don't have to worry about being let go because I have a plan in place that will protect me. What's your backup plan?
and overthrow the cotton industry, you think it will work :- ) lol
Seriously, my backup plan is to make sure I have a good education, money saved!!! had a savings account opened by my mom when I was born.
So good thing I have investments, cash and big balls.
1) Getting taxed on any interest, gains, dividends, etc. WITHOUT inflation being taken into account; and
2) Getting little or no financial aid for your kids when they head off to college.
The same kind of penalties are applied to old people who have saved up money over their lives, when it comes time for Medicare to kick in. Numerous other examples could be given.
In summary, our gov't REWARDS people who have spent all their earnings on who-knows-what and so have no savings to fall back on, with absolutely NO examination of their spending history. People are not stupid. Why do you think the US actually had a NEGATIVE savings rate last year, which hasn't occurred since the Great Depression?
Will this cut of the marketing staff also cut the marketing budget for these ads? If so, AMD may have a stronger chance of growing in the consumer space.
- rmjb
and their cozy long-term relationship with Dell.
Even an exclusive deal with Apple couldn't save Intel from layoffs.
It's true that consumers go by what they hear in sound bites (as most election results sadly show), but in the end what most people care about is price and reliability. They could care less who makes the chips. Most people see them as commodities now that the prices are so low (relatively speaking). When the first Pentium system was several thousand dollars it was a different story - when people pay that much money they do serious research. When they can get a well performing box for under $600 it's a whole different story.
For Intel to improve mind-share for consumers it needs to explain in "mn on the street" terms why and how "core duo" etc etc is so much better, why they *should* demand "Intel Inside", and do it in 15-20 seconds. Tough sell.
I think more bang for the marketing dollar can be had by going directly to the companies making laptops, desktops, and convincing them first, and continuing their "Intel Inside" incentives programs. After all - the more PCs, laptops etc are *made* with Intel chips, the more the market share will be on the sales floor.
Of course this assumes a price/power-consumtion-dissapation/performance lead.
almost like they begged for it.
While AMD continued coming out with innovative processors,
Intel just seemed to continue their status quo.
Now their employees have to pay the price and I hate seeing that
when it's those who guide the company that appear to have
dropped the ball.
This especially kills me when you look at the fact that Intel does
a good amount of manufacturing here in the United States.
Most chip companies don't do that.
Charles R. Whealton
Charles Whealton @ pleasedontspam.com
no matter how much some socialists might want to believe otherwise.
I for one never bought anything based on marketing alone. Many sources of legit info related to products and most of that isn't marketing based.
Sorry for the inproper post. Me bad!
Most of you reading this already know well, that AMD simply produced a superior product, and then priced it aggressively. Sure, there will always be Dell buyers and AOL subscribers, but consumers are getting more and more informed everyday. AMD deserves its increase in market share, as their Athlon 64 chips (especially the X2?s) are far superior to Intel?s P-4?s in more ways than one. Marketing had little to do with that, nor will it have anything to do with changing it
The problem or challenge as Intel should see it - is the same thing that faces Microsoft now, and IBM 20 years ago. They got old, fat, bald, wealthy, and forgot how to work hard. They looked at PE ratings, share values and CEO bonuses instead of the product itself. Notably, they lost Andy Grove, and worse, his philosophy.
Like the immediate challenge in front of Microsoft, Intel needs to get back to innovation, instead of concentrating on perpetuating.
Intel has regained the performance crown with the new Core 2 Duo series. Its new architecture is more efficient, consumes less electricity, and produces less heat. At the same clock speed, the Core 2 Duo is much faster than the Athlon 64 X2.
Now it is AMD's turn to play catch-up. It'll be interesting to see what AMD creates to meet the challenge.
and when our economy goes down the tolet who takes the blame ?
i am getting tired of paying for "CEOS" to make millions and the guys that work for a living getting shafted
If you have too many workers for your cash flow to support, then you have a serious problem.
You can't just "pass on the costs" in order to make up for it.
Just like you can't raise taxes endlessly to pay for every liberal social program in sight.
Just as you and I have to live within our incomes, so do companies and governments.
If you want cradle-to-grave socialism, then go live in a socalist country such as Germany, France, etc - and be prepared for astronomically high unemployment and 50%+ taxes (don't forget about high VAT, either).
That said, I think it's time to stop shipping jobs overseas - Intel has managers whose bonuses depend on how many jobs they can ship overseas, and how fast.
Also about the previous post "it's a color thing" - Intel has whole teams of HR people who are paid to *not* hire white males. In times of hiring crunches or even "hiring freezes", Intel will hire "minority candidates" but refuse to hire white males. They call this "diversity" - when in fact it's against the law.
So if Intel says they want to shed some HR personnel, then well done. Of course they need to stop their "diversity" program too (what happend to a color/gender blind "hire the best candidate for the job" as required by law).
That said, I agree that exec's (in most if not all companies) are too highly paid.
But that said, how many of us could make the big decisions well enough? Shouldn't pay be relative to skillsets? For example almost anyone can happer nails, that's why laborers are paid lower than jobs requiring degrees (unions not withstanding).
1) Focusing on "the internet" instead of performance - all because some moron came up with that infamous "interactive Super Bowl commercial" about 7 years ago where they let technically-illiterate football fans decide which way they should go with their marketing strategies. Dumb dumb dumb.
2) Craig Barrett. What did Barrett do his entire tenure - encourage performance gains? No - he built factories. "We'll build our way out of this recession", naively *assuming* demand would follow because that was what happened in the last recession, forgetting that the competitive landscape had changed in the meantime, with AMD having a much better portfolio than in 1990.
Layoffs notwithstanding I think Otellini is one smart cookie and the right guy to have in charge given the alternatives.
Somehow I don't think "Core Duo" and etc would have the priority it does under Barrett. Maybe I'm wrong, but Barrett never impressed me - I think he's good at running factories, but not whole companies.
Token Ring Adapters
OS/2 WARP Connect Workstation Installation:
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- look into finance dept for cuts
- by amerifat September 11, 2006 3:37 PM PDT
- seriously, 80% of intel finance mgrs are useless. they spend more time thinking how to justify their time and trying to befriend ops people who will support them at focal time. a lot of talk and no work.
- Like this Reply to this comment
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(39 Comments)and even some analysts working in "strategic" projects are making 80k for nothing. i know what i am talking about, believe me. the bubble has to burst one day.