Intel expects a 3 percent drop in revenue for 2006 and plans a reorganization that could let in layoffs over the next 90 days , Chief Executive Officer Paul Otellini said Thursday .
Intel profits will drop from $ 12.1 billion in 2005 to $ 9.3 billion in 2006 , Otellini predicted at the party ’s Spring Analyst Meeting in New York . In response , Intel will cut spending this year by $ 1 billion , cut capital consumption by $ 300 million and begin a 90 - day structural shake-up of “ nonperforming business unit . ”
“ We are going to restructure , repurpose and resize Intel for the future , ” Otellini say . He did not summons any numbers for possible layoffs of the troupe ’s 100,000 employee , but he said the modification would come soon .
“ It would be too simplistic to simply do a reduction in force . Our analytic thinking will be completed within 90 days , but we will not wait that long to take action . This will be a full structural shakeup , ” he said .
The disappointing fiscal numbers lead from a slump in the increase pace of personal computer sales from 12 percentage or 13 pct in recent years to 8 percent or 9 pct in 2006 , excess inventory of microprocessor at retail merchant and a release of market place portion .
Otellini did not advert names , but Advanced Micro Devices pull ahead securities industry share in the first quarter of 2006 , according to its earnings study .
Intel ’s receipts forecast is a sharp change from strong growth in late eld , which included 13.5 percent annual increment from $ 30.1 billion in 2003 to $ 34.2 billion in 2004 and $ 38.8 billion in 2005 . Intel will number final gross in 2006 of $ 37.7 billion , Otellini read .
In profit terminus , that will stimulate a sudden slump . Intel clear $ 7.5 billion in 2003 , $ 10.1 billion in 2004 , and $ 12.1 billion in 2005 . Profit will fall to $ 9.3 billion in 2006 , Otellini suppose .
In addition to the pending reorganization , Intel will attempt to regain market share by launching three dual - effect , 65 - millimicron processor in upcoming months .
“ There has been a raft of anxiety over our securities industry segment share . When you expect at a gradient of the graph , it ’s not terribly pretty , ” Otellini say .
So Intel will launch its Woodcrest chipping for servers in June , its Conroe chip for desktops in July and its Merom chip for mobile microcomputer in August . Together , they will help retake part of the lose business , but Intel turn a loss marketplace portion in three segments of the market over the first quarter of 2006 , said Anand Chandrasekher , the company ’s senior vice president and general manager for sales and marketing .
Intel lost marketplace share in channel and consumer retail area for provision reasons ; it did not build enough chipsets in the second one-half of 2005 , he say .
Intel lose market share in server for competitory ground : “ We did not adjoin the pauperization of the mart or our competitor had a better product than we did , ” Chandrasekher said .
Intel was nominate Apple ’s sole chip supplier last summer . The first Intel - power Macs began shipping in January , with Apple expecting to complete its conversion to Intel - based car by the end of 2006 .
