Das Capitolin
07-14-2006, 04:59 PM
update Intel will begin cutting about 1,000 manager jobs worldwide this week as part of an effort to become more competitive.
"This step is important because it addresses a key problem we've found in our efficiency analysis: slow and ineffective decision-making, resulting, in part, from too many management layers," Chief Executive Paul Otellini told employees in a memo sent out Thursday and seen by CNET News.com.
High ImpactWhat's new:
Intel plans to cut about 1,000 manager jobs immediately and on July 19 will offer more details of its latest restructuring efforts.
Bottom line:
The chipmaker probably isn't done cutting jobs as it continues a review of its efficiencies after two years of sluggish performance, in an echo of a 2004 call by then-CEO Craig Barrett for Intel to fight complacency in its ranks.
More stories on Intel and AMD
Intel spokesman Chuck Mulloy confirmed the layoffs Thursday, saying they would "both reduce costs and improve decision-making and communications." He didn't disclose the financial costs or benefits of the cuts, but said Intel plans to share more details Wednesday when it discusses financial results for the last quarter.
The restructuring and regrouping effort comes after two years of sluggish performance at Intel. In 2004, the company had to delay or cancel a number of products. In 2005, Intel steadily lost market share to rival Advance Micro Devices.
"Intel has been besieged by slowing PC market demand and uncharacteristically fierce competition from rival AMD. The primary concerns facing Intel's operations are declining revenues and profitability," said Martin Kariithi, an analyst at Technology Business Review.
The move, along with the sale of some communications processor assets to Marvell Technology Group in June, is part of an efficiency review Intel launched in April to become more competitive. More cuts are likely as a result of the review, Otellini said.
"You should expect that we will continue to take actions, including selective reductions, as we complete analyses and decisions about investments, expense levels and organizational structures," Otellini said in the memo. "Over the last five years at Intel, the number of managers has grown faster than our overall employee population. Our efficiency analysis and industry benchmarking have shown that we have too many management layers, top to bottom, to be effective."
Kariithi estimated that the revenue per Intel employee dropped from $408,175 in the fourth quarter of 2005 to $371,075 in the first quarter of 2006, but he expects another layoff to be announced during the financial results announcement.
To return revenue per employee to where it was a year ago, Kariithi said, Intel will have to lay off 10 percent of its staff--about 10,000 people.
Although AMD has been gaining share against its rival, it has had its own difficulties as well. Last week, the company announced revenue of $1.21 billion, significantly less than the $1.3 billion average expected by analysts and a 9 percent decrease over the first quarter.
Most managers losing their jobs will be notified Thursday and Friday, Otellini said, and will get a minimum of three months' separation pay.
Henri Richard, executive vice president of sales and marketing at AMD, earlier this year said that AMD made some of its gains in part because of Intel's complacency. Characterizing Intel as fat and sluggish has become a recurring theme with AMD.
Source: http://news.com.com/Intel+axes+1%2C000+managers/2100-1014_3-6093843.html?tag=nefd.lede
"This step is important because it addresses a key problem we've found in our efficiency analysis: slow and ineffective decision-making, resulting, in part, from too many management layers," Chief Executive Paul Otellini told employees in a memo sent out Thursday and seen by CNET News.com.
High ImpactWhat's new:
Intel plans to cut about 1,000 manager jobs immediately and on July 19 will offer more details of its latest restructuring efforts.
Bottom line:
The chipmaker probably isn't done cutting jobs as it continues a review of its efficiencies after two years of sluggish performance, in an echo of a 2004 call by then-CEO Craig Barrett for Intel to fight complacency in its ranks.
More stories on Intel and AMD
Intel spokesman Chuck Mulloy confirmed the layoffs Thursday, saying they would "both reduce costs and improve decision-making and communications." He didn't disclose the financial costs or benefits of the cuts, but said Intel plans to share more details Wednesday when it discusses financial results for the last quarter.
The restructuring and regrouping effort comes after two years of sluggish performance at Intel. In 2004, the company had to delay or cancel a number of products. In 2005, Intel steadily lost market share to rival Advance Micro Devices.
"Intel has been besieged by slowing PC market demand and uncharacteristically fierce competition from rival AMD. The primary concerns facing Intel's operations are declining revenues and profitability," said Martin Kariithi, an analyst at Technology Business Review.
The move, along with the sale of some communications processor assets to Marvell Technology Group in June, is part of an efficiency review Intel launched in April to become more competitive. More cuts are likely as a result of the review, Otellini said.
"You should expect that we will continue to take actions, including selective reductions, as we complete analyses and decisions about investments, expense levels and organizational structures," Otellini said in the memo. "Over the last five years at Intel, the number of managers has grown faster than our overall employee population. Our efficiency analysis and industry benchmarking have shown that we have too many management layers, top to bottom, to be effective."
Kariithi estimated that the revenue per Intel employee dropped from $408,175 in the fourth quarter of 2005 to $371,075 in the first quarter of 2006, but he expects another layoff to be announced during the financial results announcement.
To return revenue per employee to where it was a year ago, Kariithi said, Intel will have to lay off 10 percent of its staff--about 10,000 people.
Although AMD has been gaining share against its rival, it has had its own difficulties as well. Last week, the company announced revenue of $1.21 billion, significantly less than the $1.3 billion average expected by analysts and a 9 percent decrease over the first quarter.
Most managers losing their jobs will be notified Thursday and Friday, Otellini said, and will get a minimum of three months' separation pay.
Henri Richard, executive vice president of sales and marketing at AMD, earlier this year said that AMD made some of its gains in part because of Intel's complacency. Characterizing Intel as fat and sluggish has become a recurring theme with AMD.
Source: http://news.com.com/Intel+axes+1%2C000+managers/2100-1014_3-6093843.html?tag=nefd.lede