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Intel thins the herd

Intel has announced plans to fire 1,000 managers in a bid to help the company save $1B USD. A number of investors were expecting to see as many as 15,000 employees axed worldwide. While Intel has seen some recent gains in the retail market, AMD has been surging in sales volume for the past year and Intel's shares have taken a nearly 30% nose dive since the start of the year.

Intel last thinned the herd in 2002 when it slashed 4,000 jobs. "You should expect that we will continue to take actions, including selective reductions, as we complete analyses and decisions about investments, expense levels and organizational structures. Over the last five years at Intel, the number of managers has grown faster than our overall employee population. Our efficiency analysis and industry benchmarking have shown that we have too many management layers, top to bottom, to be effective," said Otellini in a memo to employees.

News of the job cuts comes just weeks after Intel announced that it was selling its Communications and Applications Processor business (i.e. XScale processors) to Marvell for $600 million. Intel has also been in the news recently over allegations of anti-trust violations in Germany. On a lighter note, Intel has also given us a peek at 32-core processors, the next generation of WiMAX and the company is set to announce its Core 2 Duo processors for the desktop.

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By Homerboy on 7/13/2006 5:05:53 PM , Rating: 2
15,000 overall... tough times at Intel.

RE: Wow
By TomZ on 7/13/2006 5:50:21 PM , Rating: 2
1. Intel hasn't announced 15,000 job cuts; they announced only 1000, which is only 1% of their workforce (99,900 in 2005).

2. Cost cutting and re-organizing is also something that healthy organizations regularly do. It is not necessarily a sign of "tough times."

RE: Wow
By deeznuts on 7/13/2006 6:26:02 PM , Rating: 2
Yup, that's why when there are a round of cuts, if the company is in generally good health, and it isn't a bear market (i.e. last two days) there is an uptick in their stock price. Tough times is relative, it's not as fruitful as it was in years past, but they haven't been in the red in a long time IIRC.

RE: Wow
By lemonadesoda on 7/13/2006 6:53:05 PM , Rating: 2
It's all spin. With 99,900 employees, more than 1000 will leave of their own accord, through retirement, new jobs in other companies, and just plain dismisal for incompetence.

Given typical number of years (average) that an employee stays with the company, which is approx 4 years, then:

In fact, you just change your hiring policy, which is that all vacant positions must be left vacant for 365*1,000/(99,900/4) = 16 days, and bobs-your-uncle! You made your target.

RE: Wow
By TomZ on 7/13/2006 8:21:38 PM , Rating: 2
Good point.

RE: Wow
By masher2 on 7/13/2006 10:22:56 PM , Rating: 2
> "It's all spin."

It's not spin. Cutting *positions* is what affects the bottom line. Those 1000 positions are gone forever, even if the actual means of freeing the slots up is attrition. Without the cuts, a person who quits, retires, or is fired for cause is **replaced**.

Or "backfilled", to use the crude term.

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