More Layoffs Expected with Intel Overhaul
- By The Associated Press
- September 05, 2006
With Intel Corp. apparently poised to announce the latest stage of its restructuring effort, speculation has centered not on whether the world's largest chip maker would be cutting jobs, but on how many.
"Most people are expecting a head-count reduction," said Eric Ross, an analyst with ThinkEquity Partners. The cuts are widely expected to be in the 10,000 range -- about 10 percent of Intel's work force. But Ross expects it to be higher.
"I think the numbers are going to surprise people," he said.
In advance of the announcement expected Tuesday afternoon, shares of Intel gained 8 cents, to $19.96, in trading on the Nasdaq Stock Market.
It comes amid intense pressure for the Santa Clara-based company to unload money-losing divisions and halt Advanced Micro Devices Inc. from further encroaching on its core business of making the microprocessors that act as the brains of computers.
Intel has been steadily losing profits and market share. Analysts have criticized the company for being too bloated and distracted from its focus of making the chips that power servers, desktop computers and laptops.
Speculation about massive job cuts has been rampant since Chief Executive Paul Otellini announced in April the company was planning a broad overhaul targeting money-losing business groups in every aspect of its operations.
Intel, which had about 103,000 employees worldwide at the time, vowed to cut $1 billion in spending and launched a comprehensive review of its business units.
Otellini said the restructuring will be as expansive as the company's transformation in the mid-1980s, when it exited a business it helped create -- making dynamic random access memory chips widely used to store information in computers -- to focus on microprocessors.
That shift prompted one of Intel's largest rounds of layoffs ever, with the company eliminating more than 7,000 jobs, about 30 percent of its work force at the time.
Since then, Intel has avoided large-scale layoffs. But the dot-com crash did prompt the elimination of about 11,000 jobs -- largely through attrition and buyouts -- in less than two years. Head count was reduced to about 79,000 in 2002.