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The Restructuring

September 13, 2K6

When profits fall shy of expectations, when market share is at a record low, then it's time to trim the fat.

That's what Intel is doing these days. Let's hope that Intel does not endanger certain important projects that it has underway.

Intel is in the middle of selling non-core parts of its business. And laying off thousands.

It is selling its communications and application processor business to Marvell, its media and signaling business to Eicon, its optical-networking components business to Cortina.

The company has already laid off about a thousand managers. It shall now take the axe to approximately 10,000 other employees.

That's 1% and 10% of its workforce or thereabouts.

Wallstreet was disappointed that the numbers were not even greater.

Intel's stock had risen on rumors of greater layoffs, and the stock took a dive when the news was announced that only 10,000 or so would lose their jobs.

Intel needs its employees.

The Core microarchitecture and its derivatives, the Core 2 Duo and Xeon 5100 processor families, are the biggest thing to hit computing in probably five years.

The computing industry as a whole has just transitioned from an era driven by increasing CPU frequencies, to one driven by multiplying the number of cores on a CPU. Whoever can increase cores at the fastest rate over the coming years will command the lead in performance.

Intel also needs to address further its competitive response in the x86 multiprocessor (MP) server market.

Let's hope that in the pruning process, Intel doesn't cut too deep.

Source: Intel Announces Restructuring

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