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July 13, 2006
Intel Corp. plans to cut 1,000 management jobs worldwide in an effort to cut costs and reduce the company's bureaucracy, Teri Munger, a spokeswoman at Intel's Folsom campus, said Thursday.
The world's largest computer chip maker employs an estimated 100,000 people around the globe, including 7,000 in Folsom.
The managers to be laid off work will be across all departments, Munger said. She did not specify how many Folsom jobs would be lost.
"The reason we're doing this is to improve our decision making, reduce our cost and improve our communications ability," she said.
Chief executive Paul Otellini notified all employees of the layoffs in a company-wide e-mail early Thursday.
Munger said it would take Intel (Nasdaq: INTC) three days to notify all of the managers. The last working day for all 1,000 employees will be July 28. Munger said she did not know how many employees would be laid off in Folsom.
The latest layoffs expected at the Folsom campus would be in addition to 53 layoffs notices issued in recent months to a mix of information-technology and human-resources employees in Folsom. Those employees left the company earlier this month, also as part of a broad effort by Intel to produce a leaner and more efficient business.
Intel said those employees were "re-deployed," meaning they get a chance to look for another job within the company. If they don't find one within two months, their jobs will be terminated.
The layoffs announced Thursday also stem from a 90-day efficiency review that ends this month. "In this review that the company has done a couple things have been uncovered" Munger said.
She added that, over the last five years, the number of managers has grown faster than Intel's employee population and Intel now has too many managers.
The U.S. employees will receive a minimum of three months of separation pay, plus a bonus corresponding to their length of employment with the company. They'll also receive four months of healthcare benefits and outplacement services.
"We're hoping that the actual impact locally will be minimal," said Joe Luchi, economic development director for the city of Folsom. "We're sensitive to the fact that these individuals will be losing their jobs, but we're also sensitive to the fact that Intel has to do what it needs to do to compete in a global economy."
This is not the only cut expected at Intel this month. Further decisions and announcements are expected some time over the next week, Munger said.
Intel declined to say how much money would be saved as a result of the cuts. The company plans to provide more detail Wednesday, when it releases its results for the second quarter. At that time Intel also will release third-quarter results to date and a full -year outlook. Munger said the cost savings will from this action will be reflected in that outlook.
In April, the Santa Clara-based company reported a 38 percent drop in first-quarter profit as demand decreased for personal computers and competition from smaller rival Advanced Micro Devices Inc. heated up.
Otellini vowed to restructure the company in a move aimed at saving Intel $1 billion a year.
Intel shares dropped 16 cents, or less than 1 percent, to $17.72, in trading Thursday on the Nasdaq Stock Market.
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