August 31, 2006 2:22 PM PDT

Intel expected to cut thousands of jobs

Intel Chief Executive Paul Otellini is expected to announce a massive layoff as soon as Tuesday that could eliminate as many as 10,000 jobs, CNET News.com has learned.

The Santa Clara, Calif.-based chipmaker, having suffered several financially disappointing quarters, launched an internal analysis in April to find ways to increase its efficiency. Otellini is scheduled to announce the results of the analysis, including the layoff, on Tuesday after the stock market closes, sources familiar with the plans said.

Intel has about 100,000 employees worldwide, so the cut could be as high as 10 percent of the company's staff.

The job cut is likely to weigh particularly heavily on marketing staff. Intel studies comparing its own staffing levels to competitors' concluded that the ratio of marketing personnel to salespeople was too large, the sources said.

The expected cuts won't be the first big change in sales and marketing. That group previously was led jointly by Eric Kim and Anand Chandrasekher, but in July they moved to different roles and Sean Maloney was appointed sole leader.

Intel declined to comment on the layoff plan. The company has committed to announcing the analysis results by the end of September, spokesman Chuck Mulloy said, but added, "We have not communicated publicly what the plans are with respect to that."

Most companies would love to have Intel's financial results--for example, the $885 million in net income and $8 billion in revenue the company reported for the second quarter. But compared with the year earlier, that net income figure was a 57 percent drop and the revenue a 13 percent drop. And Intel has had to warn of lowered financial results.

Part of the problem: The chipmaker has lost share to rival Advanced Micro Devices, in particular in the server market where chips are sold at higher prices. AMD rose from having no server products three years ago to claim 26 percent of the x86 server processor market in the second quarter, according to Mercury Research. AMD now sells chips to all of the four major server makers.

Intel hopes to reclaim its share with new Xeon server chips such as Woodcrest and Tulsa. It's also been fighting back with competitive Core processors for personal computers, aggressive chip prices, and plans for quickly introducing new technology.

The efficiency plan already has wrought major changes at Intel:

• The company reshuffled of top executive ranks in July, giving new jobs to most of those who reported directly to Otellini.

• It laid off 1,000 managers earlier in July, saying the move would speed decision-making.

• It sold its Xscale communications and applications chip business to Marvell Technology Group in June, reducing its work force by 1,400 positions.

• It sold part of its telecommunications business to Eicon Networks in August, trimming another 600 jobs.

See more CNET content tagged:
Paul Otellini, layoff, chip company, net income, Intel

 

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