Intel has announced plans for restructuring following an analysis of the company's structure and efficiency. As a result of the restructuring, the company expects to generate savings in costs and operating expenses of approximately USD 2 billion in 2007. In 2008 the company expects savings from this restructuring to grow to approximately USD 3 billion annually.
The savings are a combination of non-workforce related steps and a significant reduction in Intel's workforce. The company's employee population will decline to approximately 95,000 by the end of this year, resulting from workforce reductions, attrition and previously announced actions. The workforce will decline to approximately 92,000 by the middle of 2007. In addition to the savings from the workforce reduction, the company expects savings in merchandising expenses, capital and materials.
“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 Paul Otellini, Intel president and chief executive officer.
Most job reductions this year will occur in management, marketing and information technology functions, reductions related to the previously announced sale of businesses, and attrition. In 2007, the reductions will be more broadly based as Intel improves labour efficiency in manufacturing, improves equipment utilisation, eliminates organisational redundancies, and improves product design methods and processes.
Intel is hoping that its restructuring and layoffs will have the same result that HP's 15,000 jobs cuts had on the company, said Roger Kay, an analyst with Endpoint Technologies Associates. HP's profits have returned just over a year after it downsized, and its stock price has also improved.
Kay said, "This is the other shoe dropping." Intel's partners and customers will at least have the uncertainty removed from their dealings with the company, which is no consolation to the Intel marketing employees about to learn their fate, he said.
