Intel’s Otellini Links Layoffs to Turnaround Plan

Intel says its plan to lay off 1,000 managers worldwide is a bet on its future.

The company began informing those managers affected by the job cuts—which could be the first such action resulting from a broad-based internal review of its business—on the morning of July 13.

Intel, which has been under pressure from rival Advanced Micro Devices of late, intends for the cuts to remove extra management layers and thus improve its internal communications and decision-making capabilities, making it more competitive, Intel CEO Paul Otellini said in a memo to company staff, obtained by eWEEK.

“This step is important because it addresses a key problem we’ve found in our efficiency analysis—slow and ineffective decision-making, resulting, in part, from too many management layers,” Otellini wrote in the memo. Ultimately, he said, “We have too many management layers, top to bottom, to be effective.”

Otellini indicated that the current set of layoffs may not spell the end of job reductions or other restructuring actions.

“We are in the process of fundamentally changing our behaviors and our structure for where our business and industry are going. You should expect that we will continue to take actions, including selective reductions, as we complete analyses and decisions about investments, expense levels and organizational structures,” he wrote.

Indeed, the chip maker could reduce its overall employee roster of about 100,000 by as many as 10,000 to 15,000 workers, according to a July 13 report published by analyst Doug Freedman, of American Technology Research, in San Francisco.

“We believe investors are looking for work force reductions in the range of 10,000 to 15,000, as [Intel] streamlines research and development with a PC-centric focus,” Freedman wrote in his report.

An Intel spokesperson confirmed the plan to lay off 1,000 managers, but declined to comment on the Freedman report.

Intel’s internal review—which Otellini pledged would leave no stone unturned—is designed to make changes that will help it become a more agile and competitive player in the PC market in the future.

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