Intel admits global job cuts could affect the Middle East

Marketing and IT departments will bear the brunt

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By  Published  September 15, 2006

Intel’s marketing and IT departments will absorb the majority of the impact from its decision to cut 10,500 employees worldwide by the middle of next year — and this time round the chip giant’s Middle East operation may not escape unscathed.

Intel is looking to reduce its workforce to around 92,000 by the middle of next year, as part of a drive to cut US$2 billion in costs, it said this month (see IT Weekly 9-15 September 2006).

Officials at Intel told IT Weekly that this could lead to cuts in the Middle East operation.

Orietta Sutherberry, Intel Europe, Middle East and Africa (EMEA) spokesperson, said at the EMEA launch of its new VPro business platform that the reductions would be “proportionate” to the people working in each region. “There could be cuts in the Middle East region,” Sutherberry told IT Weekly at the event in Antwerp, Belgium.

“But at the moment we don’t have the details for each country and we would like to communicate this to the employees first.”

The job cuts are part of a wider restructuring operation, which started in April and has already lad to the removal of 1,000 managers worldwide.

It has also seen 2,000 staff transferred in the sale of Intel’s communications processor business to telecom chip firm Marvell Technology for US$600million in June, and in last month’s sale of its telecommunications business to internet connectivity vendor Eicon Networks for an undisclosed amount.

The company hopes to save around US$2 billion in operating expenses next year and another US$3 billion the following year through the cutbacks, but has a tough job on its hands if it is to turn around an increasingly alarming profits slump.

CEO Paul Otellini announced April’s restructuring following the news that the giant’s fiscal first quarter profits had plummeted 38% compared to Q105 and its sales had dipped 5%.

The situation did not improve when Intel released its second quarter results in July. Profits crashed 57% to under US$1 billion compared to Q205 — the biggest drop in net income in more than four years — and sales slumped 13% to US$8 billion.

Now all eyes are on Intel’s fiscal third quarter results, expected to be released in Mid-October, to see whether the cutbacks and release of products, including its new Core 2 Duo processors and VPro platform, can turn things around.

While Intel has been licking its wounds and plotting its comeback over the past five months, smaller rival AMD has been revelling in the spotlight and taking swings at Intel’s market share at every opportunity.

The latest feather in AMD’s cap came in the form of Dell’s announcement last month that it was extending its relationship with AMD to include desktop PCs — Dell notebooks powered by AMD processors are reportedly just around the corner.

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