Intel Trims Middle-Management Fat

    July 13, 2006
    WebProNews Staff

CEO Paul Otellini and other executives have announced the first move resulting from an extensive internal review started three months ago, by cutting 1,000 jobs.

Intel (INTC) declared a 10 cents per share dividend today; that news received a press release and front page coverage on The job cuts reported by IDG News, well, they didn’t quite make that a front page issue.

1,000 jobs from throughout Intel’s global operations will get the axe, as Intel looks to make about a billion dollars in cost savings. An Intel spokesperson, Bill Calder, said, “This is one of the first actions of the structure and efficiency project we announced in April. It is designed to reduce cost and improve decision making.”

It is thought a lot of deadwood has accumulated in the Intel ranks since the company began a post dot-com crash resurgence. Ongoing price pressure and antitrust lawsuits initiated by Intel’s bitter rival, Advanced Micro Designs (AMD), have contributed to an environment that caused Intel to drop its earnings projection by nearly $3 billion compared to 2005’s numbers.

The first 1,000 jobs cut are thought to be the start of many more, but Intel isn’t talking about those yet. The company announces its quarterly numbers on July 19th, when more drastic measures may be part of the conversation.

Analysts following the chipmaker think Intel needs to shed around ten to fifteen percent of the workforce to have a significant impact. Disappointment in the 1,000 cuts revealed today led investors to push shares down 16 cents to 17.72 in trading today.

“If you go backwards over the past five years, the number of managers has grown faster than the number of employees. That affects both communications and decision making,” Calder also said in the report. We wonder how many of them helped Intel recover from the malaise it was in when the bottom dropped out for the tech industry in 2000.


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David Utter is a staff writer for WebProNews covering technology and business.