Intel to Lay-Off 10,500

123jump.com Staff
05 Sep, 2006
New York City

Intel announced much rumored restructuring and said that it plans to lay-off 10,500 people. Most of the job losses will be in marketing, management and information technology areas. The company also plans to avoid spending $1 billion in capital expenditures.

Microprocessor leader Intel announced that it will eliminate 10,500 jobs through lay-offs, attrition and sale of underperforming divisions. The company expects the severance cost to total $200 million but by the year 2008 generate annual savings of $3 billion. The company also plans to save $1 billion through lower capital expenditure and better utilization of space and technology.

The company''s employee population will decline to approximately 95,000 by the end of this year, resulting from workforce reductions and attrition. The workforce will decline to approximately 92,000 by the middle of 2007 – 10,500 fewer than the company''s employee population at the end of the second quarter of 2006.

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 in the press release.

For the last four months, rumors of layoffs between 7,000 and 15,000 have been circulating in the Silicon Valley. In April, Paul Otellini said that company needs to restructure and plans to save $1 billion in cost in the year 2006.

Intel ((INTC)), though current market leader in microprocessor, has been steadily losing market share to Advanced Micro Devices ((AMD)). In the second quarter the company sold its money losing communication division to Marvell Technology ((MRVL)) and in August sold its media and signaling business to Eicon Networks Corp.

Intel stock in the past five years has traded between the high of $36.75 and low of $12.95 and currently trades below $20. AMD stock has traded between the low of $3.10 and high of $42.70 and closed today at $26.20.