Intel layoffs trim down company

Not satisfied with its string of product announcements and sunny press coverage in recent weeks, Intel kept the ax swinging, announcing plans to lay off thousands more employees as part of a larger restructuring that will include some 10,500 job cuts by mid-2007.

The move, announced late Tuesday, followed widespread rumors of upcoming cuts. With an eye on the bottom line, Intel said that the restructuring will help save $2 billion in 2007 and $3 billion annually in 2008 and beyond.

Intel CEO Paul Otellini has made no secret of his desire to slim down the company, which still dominates the computer chip market but has been steadily losing market share to rival AMD in recent years. In June, Intel sold its communications and application processor unit to Marvell Technology Group for $600 million. The company then cut about 1,000 management jobs in July. This time around, Intel is hoping a combination of layoffs and non-workforce-related steps, such as cutbacks on merchandising, capital, and materials expenses, will make the difference.

“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,” Otellini said in a statement.

Rob Enderle, principal analyst at Enderle Group, said the company’s piecemeal approach to layoffs recall HP’s efforts to trim down under then-CEO Carly Fiorino: multiple rounds of layoffs that left remaining workers with a only a vague idea of the company’s direction.

“I’m not convinced that this will do what [Intel] expects it will do. Cuts don’t help the overall productivity and competitiveness of a firm. You lose a lot of people, then you have to recover from that loss,” Enderle said.