Intel Restructures

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SANTA CLARA, Calif. Intel provided an overview of its restructuring plan for the long-term future, detailing reductions in workforce, merchandising expenses, capital, and materials to stay competitive in new markets and applications. Intel warns against focusing solely on the competition with Advanced Micro Devices (AMD). "AMD is only a piece of this; in the future we'll have new competitors and the marketplace in general will change," explained Chuck Mulloy, corporate spokesman for Intel. A three-month-long analysis of structure and efficiency resulted in cuts expected to total $3B in annual savings.

The company will immediately eliminate management, marketing, and information technology positions in 2006, reducing staff from a reported 102,500 to 95,000 people. A layoff announced in January, sales of businesses to Marvel and Eicon, along with normal attrition, will factor into these numbers, said Mulloy, adding that some of these positions have already been vacated. 2007 reductions will cover a broader base meaning laborers in manufacturing and jobs that have become organizationally redundant. In total Intel anticipates losing 10,500 employees in the restructuring. These actions are difficult but essential to the company's future, said Paul Otellini, president and CEO.

Promoting education, collaboration initiatives, and corporate responsibility programs will not be affected, according to Mulloy. He explained that critical improvement areas involved cutting down on time-to-market and increasing its return on investment (ROI) in co-marketing programs, advertising, and related ventures. Exploiting the capacity of existing equipment and space fully was another primary objective.

Though an update to Intel's long-term business outlook will not be released concurrently with the streamlining plans, the company did announce rough figures for revenue savings. In addition to the estimated $2B in initial, 2007 savings, the company expects to retain about $3B in 2008 and subsequent years. A $1B capital expenditure avoidance will also contribute to overall savings.



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