April 27, 2006 8:11 AM PDT

Intel to get widespread restructuring

CEO Paul Otellini said Thursday that Intel will undergo a complete restructuring.

"We are taking a tight look at spending and structure," Otellini said at the chipmaker's shareholder meeting. "We are going to restructure, resize and repurpose Intel to adjust to the business realities of today and tomorrow."

Paul Otellini Paul Otellini

There was no mention of layoffs.

Otellini did say a companywide Webcast was held last week to inform 100,000 Intel employees that a restructuring and evaluation process was about to take place.

The comprehensive project, which will look at ways to cut costs per unit and improve employee productivity, will take place over the next 90 days, he said.

Intel plans to implement changes immediately as issues, such as underperforming business units, are discovered.

Otellini said he is determined to make Intel a more nimble company.

In an effort to overcome its loss of market share amid a slower-growing overall market, Intel plans to launch its largest product refresh in years.

"New products based on the Core microarchitecture for power and performance will be launched this summer and refresh the Intel product line in all segments," Otellini said.

Three new chips, one for each of the Core market segments, will be part of the rollout: Woodcrest for servers in June, Conroe for desktops in July, and Merom for notebooks in August.

Because Intel sees the server market as its weakest link, Woodcrest will be launched first, Otellini said.

The company is also releasing Broadwater, a new desktop chipset, in an effort to attack a bottleneck of chipset inventory.

"Broadwater will be the fastest chipset ramp-up in the company history," Otellini said.

Intel's expenses are out of line with its revenue and profit, compared with those of its competitors, TechKnowledge Strategies analyst Mike Feibus said.

"Intel is coming off a time when nobody got fired for buying Intel. Their hardware sold at a premium," Feibus said. "We've been watching prices drop like falling rain over the past two years. But the company has a cost structure like the good old days."

Feibus said Otellini is making the right move by making cuts now rather than postponing them until problems worsen. "You've got to give Otellini credit for taking the bull by the horns and understanding the environment today," Feibus said.

Feibus expected job cuts across the board at Intel, saying design, marketing and other teams all are disproportionately large compared with those of competitors.

CNET News.com's Stephen Shankland contributed to this report.

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8 comments

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Open the chips and save
If you open the chips up then you dont have to warrenty so much and let repair people keep their jobs.
Posted by Blito (436 comments )
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huh???
Open the chips?
Posted by Lindy01 (443 comments )
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Giev him credit?
For something they should have done a long time ago.

Kieran Mullen
Posted by kieranmullen (1070 comments )
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Good Start, Then start listening to your consumers...
Not just your fatcat manufacturers because they are only following you. Your primary competitor is listening to consumers lower on the chain and is taking that to the bank.
For years, and to this day You (Intel) have mandated what the consumer wanted not asked or listened. If you had listened you wouldn't have the Itanic (Itanium) eating up your research dollars while only bringing in pennies on the dollar, It's time to ditch it. You would not have pushed RAMBUS RDIMMs on us if we wanted your Pentium4 which when tied to the 850 cheapset we didn't want, it was junk.
And if you listened to us you wouldn;t have scrapped the mixed 32/64 bit processor which you only brought back after AMD starting making actual profits with.
I'm not saying that everything that Intel has done has been bad but they need to listen a bit more to their technical consumers than their own in-house engineers and manufacturing "yes" men like Dell.
One more thing, you had better do something about your interchip and memory communications because your "HUB" Front Side Bus just isn't cutting it anymore. Bravo to you (Intel) for basing your future incarnations on the PentiumIII architecture because that is the last good processor architecture you made and I think your Advanced Management Technology AMT is killer technology if you can only get more support for it.

Fred Dunn
Posted by fred dunn (793 comments )
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since unobtainium has been swell ...
gosh, i hope they continue to make it even sweller. or, is that itanium?
Posted by Lolo Gecko (131 comments )
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Layoffs coming ?
From the language of management, seems there will be
big layoffs
Posted by lohiaved (2 comments )
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choose the right place to do cost saving
choose the right place to do cost saving!!!don't do cost saving blindly =)
Posted by flowergoo (3 comments )
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