Intel CEO talks tough with restructuring moves

April 28, 2006 – Intel Corp. is embarking upon a broad restructuring plan that will focus on all aspects of its business, in an effort to fight back against growing competition from AMD and a slide in PC demand.

“No stone will remain unturned or unlooked at,” said CEO Paul Otellini, at an analyst conference in New York City. Details on the new plan are expected in 3Q06.

Intel’s CEO aims to mount a turnaround from recent poor performance at the chipmaking giant. Lower-than-expected demand from the PC sector and rising inventories dented the company’s 1Q06 results, with sales down nearly 40% year-on-year. Intel also cut its projections for full-year sales, profits, and capex. Intel also lost roughly five percentage points of market share in 1Q06.

Otellini expressed confidence that it will regain share in 2H06 once it starts shipping its “Core” microprocessors, offering higher performance and lower power consumption, as well as the company’s Viiv and vPro chip technologies targeting home-entertainment and business desktop end-use.

The restructuring announcement also will help right the ship, according to Otellini. He reportedly told analysts that over the next 90 days, the company will identify underperforming business groups and cost inefficiencies, and that just a workforce reduction would be too “simplistic” a measure.


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