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Massive job cuts expected at Intel
Intel
chief executive Paul Otellini is expected to announce a massive layoff
as soon as Tuesday that could eliminate as many as 10,000 jobs.The
chipmaker, having suffered several financially disappointing quarters,
launched an internal analysis in April to find ways to increase its
efficiency. Otellini is scheduled to announce the results of the
analysis, including the layoff, on Tuesday after the stock market
closes, sources familiar with the plans said.Intel has about 100,000
employees worldwide, so the cut could be as high as 10 percent of the
company’s staff.The job cut is likely to weigh particularly heavily on
marketing staff. Intel studies comparing its own staffing levels to
competitors’ concluded that the ratio of marketing personnel to
salespeople was too large, the sources said.The expected cuts won’t be
the first big change in sales and marketing. That group previously was
led jointly by Eric Kim and Anand Chandrasekher, but in July they moved
to different roles and Sean Maloney was appointed sole leader.Intel
declined to comment on the layoff plan. The company has committed to
announcing the analysis results by the end of September, spokesman
Chuck Mulloy said, but added, “We have not communicated publicly what
the plans are with respect to that”.Most companies would love to have
Intel’s financial results — for example, the $885m in net income and
$8bn in revenue the company reported for the second quarter. But
compared with the previous year, that net income figure was a 57
percent drop and the revenue a 13 percent drop. And Intel has had to
warn of lowered financial results.Part of the problem is the fact that
the chipmaker has lost share to rival AMD, in particular in the server
market where chips are sold at higher prices. AMD rose from having no
server products three years ago to claim 26 percent of the x86 server
processor market in the second quarter, according to Mercury Research.
AMD now sells chips to all of the four major server makers.Intel hopes
to reclaim its share with new Xeon server chips such as Woodcrest and
Tulsa. It’s also been fighting back with competitive Core processors
for personal computers, aggressive chip prices, and plans for quickly
introducing new technology.
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