CEO: Intel to Undergo Broad Restructuring

Intel Corp. will undergo a broad restructuring that will focus on every aspect of the chip-maker's operations, Chief Executive Paul Otellini told analysts Thursday.

"No stone will remain unturned or unlooked at," Otellini said at a meeting in New York City. "You will see a leaner, more agile and more efficient Intel Corp."

Though the company provided no specifics on the restructuring, Intel shares rose 32 cents, or 1.6 percent, to $19.81, on the Nasdaq Stock Market following the announcement.

Last week, Intel reported a 38 percent drop in first-quarter profit as sales growth for personal computers slowed, causing inventory buildups among PC makers. The world's largest chip maker announced it would cut about $1 billion in spending during the remainder of 2006.

Otellini said Thursday the company would not stop there. Over the next 90 days, executives will identify underperforming business groups and cost inefficiencies. Without elaborating, he said it would be "simplistic" if the restructuring included only a reduction of Intel's work force.

Otellini said revenue for 2006 would decline about 3 percent, which translates to $37.64 billion, from last year's $38.8 billion. It was the same guidance Intel provided last week. Previously, the company predicted of an increase of 6 percent to 9 percent.

Thursday's announcement comes as Intel, the world's biggest chip maker, has stumbled in recent months. A host of new products from Advanced Micro Devices Inc. has allowed Intel's biggest competitor in PC microprocessors to steal away market share.

Intel also has recently struggled with shortages of chipsets, which connect a processor to other components inside a personal computer. That led PC makers to look elsewhere for chipsets and microprocessors.

Last week, the company said it also failed to realize that PC growth started slowing in the third quarter of last year. Intel, which had expected growth in the range of 10 percent to 12 percent, now sees the rate "in the high single digits," Otellini said.

In January 2004, Intel announced a reorganization that created five business divisions that focus on specific markets, including businesses, homes, mobility and health care.

On Thursday, Otellini characterized the latest restructuring as the company's largest since the mid-1980s.


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