Intel Says it Will
Cut 10,500 Jobs by Mid-2007 

FRANK MICHAEL RUSSELL / San Jose Mercury News 5sep2006

Chip giant Intel is cutting 10,500 jobs, the Santa Clara company announced this afternoon just after the stock market closed. Intel expects the cuts to save $2 billion in 2007 and $3 billion a year starting in 2008.

"These actions, while difficult, are essential to Intel becoming a more agile and efficient company, not just for this year or the next, but for years to come," Chief Executive Paul Otellini said in a statement announcing the cuts.

Intel officially broke the news to employees this afternoon, although the workforce reduction had been widely reported late last week.

The company said its workforce will be cut to about 95,000 by the end of this year and to about 92,000 by the middle of 2007. Intel will cut management, marketing, information-technology and other jobs this year. Intel will seek to improve its manufacturing efficiency by the middle of next year, resulting in the additional cuts.

Intel expects $200 million in severance costs from the job cuts.

Our chip industry writer Dean Takahashi has more details.

A new video iPod? Downloadable movies on iTunes? The invitations are out for Apple Computer's big event next Tuesday, so that gives us a full week to guess what's coming next from the Cupertino company.

The invitations, which say "It's Showtime," feature the Apple logo with beams of light associated with a Hollywood premiere, leading analysts and Apple news sites to speculate on the likelihood of movie downloads and a new iPod with a larger video screen.

Other Apple watchers say Chief Executive Steve Jobs might introduce an 8-gigabyte version of the svelte iPod nano capable of holding 2,000 songs. (The current top-of-the-line nano has 4 gigabytes of flash memory.) Also possible: new Mac computers running faster Intel chips.

Analysts say the moves are designed to keep Apple well ahead of its rivals in the multimedia market, just ahead of the holiday shopping season. "This market is all about perception and it's unlikely that Apple will go into the holiday season with last year's products," Jupiter Research analyst Michael Gartenberg told Bloomberg News. "They know that competitors will find ways to catch up with them and they need to find ways not to be one step ahead, but several steps ahead."

For now, investors on Wall Street are enjoying the show. Apple's shares soared $3.10, or 4.5 percent, to close at $71.48.

Chip-equipment giant Applied Materials sees a bright future in solar energy.

The Santa Clara company, which is best known for selling manufacturing equipment to giant semiconductor makers such as Intel, said today that it will expand into the market for making solar photovoltaic cells.

Applied said its products will lower the overall cost of electricity generated by solar power. "The solar industry has reached the inflection point that Applied Materials has been waiting for, as solar customers seek economies of scale with suppliers who can better meet their needs," Chief Executive Mike Splinter said in a statement.

source: http://www.mercurynews.com/mld/mercurynews/news/columnists/15445207.htm 5sep2006

Intel to Eliminate 10,500 Jobs
As Part of Large Restructuring

Wall Street Journal 5sep2006

Intel Corp. plans to cut 10,500 jobs over the next year as the chip giant looks to boost profit margins amid fierce competition from Advanced Micro Devices Inc.

Intel announced Tuesday it would eliminate the jobs, representing about 10% of its work force, by the middle of 2007.

The Santa Clara, Calif.-based company said most of the job cuts will come from the management, marketing and information-technology ranks.

The company said it expects to save about $5 billion from the move over the next two years, but said severance costs could total approximately $200 million, offsetting some of the expected savings.

"These actions, while difficult, are essential to Intel becoming a more agile and efficient company, not just for this year or the next, but for years to come," said Intel Chief Executive Paul Otellini in a press release Tuesday.

There had been speculation that Intel was planning to eliminate as many as 20,000 jobs.

Intel has undergone a major restructuring effort after the company, which makes the brains that power most of the world's computers, stumbled amid competition from much smaller rival AMD.

In April the company announced a sweeping review of its businesses and said it would take $1 billion out of projected spending in 2006. Intel said then that it would complete its review process by the end of September.

During the second quarter, Intel announced the sale of its communications business to Marvell Technology Group Ltd. and announced the elimination of 1,000 management positions. In August it sold its media and signaling business to Canada's Eicon Networks Corp.

Intel underwent a large restructuring process in the mid-1980s, when it exited a business it helped create -- making dynamic random access memory chips widely used to store information in computers -- to focus on microprocessors.

That shift prompted one of Intel's largest rounds of layoffs ever, with the company eliminating more than 7,000 jobs, about 30% of its work force at the time.

Since then, Intel has avoided large-scale layoffs. But the dot-com crash did prompt the elimination of about 11,000 jobs -- largely through attrition and buyouts -- in less than two years. Head count was reduced to about 79,000 in 2002.

Intel cutting 10,500 Jobs in Restructuring

JORDON ROBERTSON / AP 5sep2006

SAN JOSE, CA – Chip-maker Intel said today it will eliminate 10,500 jobs — about 10 percent of its work force — through layoffs, attrition and the sale of underperforming business groups as part of a massive restructuring.

The company said most of the job cuts this year will come from its management, marketing and information technology ranks, and will expand next year to include manufacturing, design and other segments.

About 1,700 jobs are expected to be cut in Oregon, if cuts are proportionate, the Oregonian newspaper said on its Web site today. Intel employs about 17,000 in Oregon, the newspaper said. There are several hundred Intel employees in Washington state.

The cuts are expected to save the company $3 billion per year by 2008. Severance costs are expected to total $200 million.

"These actions, while difficult, are essential to Intel becoming a more agile and efficient company, not just for this year or the next, but for years to come," Chief Executive Paul Otellini said in a statement.

The world's largest chip maker is fighting to reverse sinking profits and regain market share stolen by smaller rival Advanced Micro Devices (AMD).

Intel has been under intense pressure to unload money-losing divisions and halt the encroachment of AMD on its lucrative core business making the microprocessors that act as the brains of computers.

Intel has been steadily losing profits and market share. Analysts have criticized it for reacting too slowly after AMD's 2003 launch of the critically acclaimed Opteron and Athlon 64 chips for servers and desktop PCs.

Before the announcement, shares of Intel rose 11 cents to close at $19.99 today. In after-hours trading, shares fell 16 cents to $19.83.

Speculation about massive job cuts has been rampant since Otellini announced in April the company was planning a broad overhaul targeting money-losing business groups in every aspect of its operations.

Intel, which had about 103,000 employees worldwide at the time, vowed to cut $1 billion in spending. It also launched the review of its business units.

Otellini said the restructuring will be as expansive as the company's transformation in the mid-1980s, when it exited a business it helped create — making dynamic random access memory chips widely used to store information in computers — to focus on microprocessors.

That shift prompted one of Intel's largest rounds of layoffs ever, with the company eliminating more than 7,000 jobs, about 30 percent of its work force at the time.

Since then, Intel has avoided large-scale layoffs. But the dot-com crash did prompt the elimination of about 11,000 jobs — largely through attrition and buyouts — in less than two years. Head count was reduced to about 79,000 in 2002.

source: http://seattletimes.nwsource.com/html/businesstechnology/2003244663_webintelljobs05.html 5sep2006