Intel executives told employees on Thursday they would cut 1,000 management jobs in an effort to rebound from poor profits in recent quarters, the company said.
The layoffs will be complete by the end of July, and will be spread across Intel divisions worldwide, said company spokesman Bill Calder.
The move fits in with a pledge in April by Chief Executive Officer Paul Otellini to restructure the company within 90 days after he scaled back earnings forecasts to US$9.3 billion in 2006, compared to $12.1 billion in 2005.
Intel, the world’s largest chip maker, has watched the global PC market slow its growth at the same time its rival Advanced Micro Devices Inc. (AMD) began to win significant market share.
“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,” Calder said.
Some analysts expect the company to announce even harsher cuts during its quarterly earnings report July 19. Calder called the rumors “speculation,” but added, “the efficiency analysis continues.”
Intel decided to begin its cuts with managers because the company is top-heavy.
“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 said.
Thursday’s move helps correct that problem, but Calder declined to share details on how much money the company would save, or how many managers would still be employed after the cuts. Intel has about 100,000 employees total.
Since Otellini’s promise, he has made a series of moves. In June, he sold Intel’s Xscale processor line to Marvell Technology Group Ltd. for $600 million. Those chips handle voice data in electronics such as BlackBerry devices, and general processing in smartphones like the Motorola Q and Palm Treo.
Intel also combined its NAND and NOR flash memory groups into a single division, combining fabrication plants and technology development with marketing and product development.
Intel also notified 17 Ethernet component developers at a Glasgow, Scotland, site that it would eliminate their jobs by September. And the company outsourced the jobs at its optical transponder division in Newark, California.