Big Intel Layoffs Could Come Next Week

The original hope of reduction through attrition doesn't seem to have worked.
Posted September 1, 2006

Andy Patrizio

Intel won't comment on published reports it plans to announce the layoff of as much as ten percent of its workforce next Tuesday, the day after Labor Day.

Intel (Quote, Chart) had said earlier this year that it hoped to avoid layoffs. Chief Financial Officer Andy Bryant said in April he didn't the planned review of company operations would have to lead to firings.

Intel's CFO said back then that he was hoping for "some kind of headcount reduction by attrition and conserving around the edges. It doesn't require a layoff, but discipline around not hiring people."

But those plans appears to have changed. Intel could announce a layoff of as many as 10,000 employees next week, according to

Intel spokesman Chuck Mulloy would neither confirm or deny layoffs are imminent.

"We have said all along we intend to announce results of our structural and efficiency review shortly. We're on track to do it in the third quarter but beyond that we have nothing more to say at this time," said Intel spokesman Chuck Mulloy.

The fiscal results from the last quarter were a disappointment and Intel had been telling Wall Street analysts that the second half of the year would be much stronger.

But that doesn't appear to be panning out, according to chip analyst Nathan Brookwood of Insight64. Even though it has a hot new product line in the Core 2 Duo, its fabrication plants are still churning out older NetBurst-based Pentium D chips, since it's not trivial to change fabrication techniques. That will mean a huge discount to move the old inventory.

Since taking the reigns of Intel 18 months ago, CEO Paul Otellini has done more to change direction of the company than his predecessor Craig Barrett did in the five years he ran Intel, said Brookwood. Among the changes:

  • More than 1,000 managers laid off earlier in July.
  • Sold its Xscale communications and applications chip business to Marvell Technology in June.
  • Sold its media and signaling business to Eicon Networks in August.
  • Significant rebranding and changes to the product line, culminating in the release of the well-received Core CPUs.
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