Intel to cut jobs throughout 2006 ReceivedSPF: None receiver=nym.alias.net clientip=70.89.231.62 Comments: This message

'We had become bloated. It's like middle-age spread,' says exec Ben Ames

July 18, 2006 (IDG News Service) -- Intel Corp. will continue its corporate reorganization through the end of 2006, stretching beyond the 90-day window promised by CEO Paul Otellini.

On the heels of announcing Thursday that it would lay off 1,000 managers, the company said it plans to roll out additional changes in its effort to recapture slipping profits, said Donald MacDonald, vice president and general manager of the digital home group at Intel.

He denied industry rumors that executives had been ordered to cut a much larger number of jobs. Some analysts predicted that Intel would cut another 10,000 jobs before announcing quarterly earnings tomorrow.

However, MacDonald acknowledged that Intel executives are looking for redundancies in the business structure of their 100,000-person company.

"Nothing is off the table," MacDonald said. "Look at our messaging team; we don't launch a new product every day, so why do we need a messaging team in every department?"

Likewise, the company could buttign more tasks to its outside public relations agency instead of duplicating its work with corporate PR workers. Intel could also simplify its product line, reducing the number of chip variants, or SKUs, it sells.

Intel seems to be making a collection of modest changes to scattered departments, but they all contribute to Otellini's vision of a more efficient company, MacDonald said.

"This is not rest by a thousand cuts," MacDonald said. "If it didn't involve people, this would be a really exciting time for the company. But I had to lay some people off on Friday, and it was horrible."

The reorganization began in April, when Otellini told investors that Intel's weak first-quarter performance would continue through the rest of the year, driving the company to a forecast annual profit of $9.3 billion, down from $12.1 billion in 2005.

Intel is suffering from a slump in the growth rate of PC sales, excess inventory of microprocessors at retailers and a loss of market share to compebreastor Advanced Micro Devices Inc.

In response, Otellini pledged to reorganize the company over the next 90 days. Since then, Intel has combined its NAND and NOR flash memory groups, sold off its XScale smart-phone processor division to Marvell Technology Group Ltd. for $600 million, and initiated the managers' layoffs.

Although Intel has not delivered the single round of heavy layoffs that some financial analysts are calling for, its process of announcing a series of smaller changes will be just as effective, MacDonald said.

"We had become bloated. It's like middle-age spread," he said, patting his belly. "You don't know how it happens, but one day you look down and it's there.

"As a senior manager, I bear some responsibility. And now we have to mop up the mess," McDonald said.

Toshiba Corp. made a similar mistake after that company saw great success as the top vendor of laptops around 1996, he said. It soon started making additional computer models -- like desktops and servers -- and lost its focus. By acting today, Intel hopes to avoid that fate and retain its status as the world's largest semiconductor maker.