July 14, 2006 – Intel Corp. says it will lay off 1000 managers, about 1% of its workforce, following up on its promise to identify underperforming business areas and respark growth. Financial details of the proposed cutbacks, such as charges or proposed savings, were not disclosed.
Several weeks ago the company said it would closely examine all areas of the business, in an effort to maximize efficiencies, identify and eliminate redundancies and underperforming areas, and ultimately save $1 billion in costs. The 1000-headcount reduction is the first step in the process — not counting the $600 million sale last month of its communications and applications processor business to Marvell Technology Group Ltd. — but analysts expect this is the beginning of a much bigger shakeup.
“We thought they were going to cut 10,000 or more jobs in total, so this is one step of the way,” said Eric Ross, an analyst with ThinkEquity Partners, quoted by Reuters. “If this is managers, I’m sure there are more to come.”
Among other possible business areas on the chopping block: Intel’s NOR flash business, which has dragged profits for years, as well as the Itanium server chip business. The company saw profits dip nearly 40% year-on-year in 1Q06, and projects a potential 60% Y-Y decline in its 2Q results, mainly due to aggressive price cuts undertaken to reverse marketshare gains made by rival AMD.