In a widely expected move, Intel
The move, while obviously painful for the employees and their families, was a necessary step. To begin, the job eliminations are expected to save $5 billion over the next two years. They should also make Intel more efficient, help improve its sagging margins, and provide further strategic focus to the company.
As of late, the company has been suffering greatly at the hands of Advanced Micro Devices
Intel CEO Paul Otellini had already been acting to halt steadily eroding market share and declining profits. (You might recall the company posted a 56% drop in net profits in the second quarter of 2006.) In July, the Santa Clara-based chip maker unloaded 1,400 workers when it sold its communication chip business to Marvell Technology Group
This latest action, however, is Otellini's biggest swing of the ax and will likely produce the largest dividends. In many ways, I liken it to the actions of Hewlett-Packard
As I said earlier, the massive downsizing is unfortunate for the Intel employees who will lose their jobs, but the best way for Intel to get back in the game is to chip away at its workforce.
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