Intel to get widespread restructuring

CEO Paul Otellini says chipmaker needs to "adjust to the business realities of today and tomorrow."

CEO Paul Otellini said Thursday that Intel will undergo a complete restructuring.

"We are taking a tight look at spending and structure," Otellini said at the chipmaker's shareholder meeting. "We are going to restructure, resize and repurpose Intel to adjust to the business realities of today and tomorrow."

Paul Otellini Paul Otellini

There was no mention of layoffs.

Otellini did say a companywide Webcast was held last week to inform 100,000 Intel employees that a restructuring and evaluation process was about to take place.

The comprehensive project, which will look at ways to cut costs per unit and improve employee productivity, will take place over the next 90 days, he said.

Intel plans to implement changes immediately as issues, such as underperforming business units, are discovered.

Otellini said he is determined to make Intel a more nimble company.

In an effort to overcome its loss of market share amid a slower-growing overall market, Intel plans to launch its largest product refresh in years.

"New products based on the Core microarchitecture for power and performance will be launched this summer and refresh the Intel product line in all segments," Otellini said.

Three new chips, one for each of the Core market segments, will be part of the rollout: Woodcrest for servers in June, Conroe for desktops in July, and Merom for notebooks in August.

Because Intel sees the server market as its weakest link, Woodcrest will be launched first, Otellini said.

The company is also releasing Broadwater, a new desktop chipset, in an effort to attack a bottleneck of chipset inventory.

"Broadwater will be the fastest chipset ramp-up in the company history," Otellini said.

Intel's expenses are out of line with its revenue and profit, compared with those of its competitors, TechKnowledge Strategies analyst Mike Feibus said.

"Intel is coming off a time when nobody got fired for buying Intel. Their hardware sold at a premium," Feibus said. "We've been watching prices drop like falling rain over the past two years. But the company has a cost structure like the good old days."

Feibus said Otellini is making the right move by making cuts now rather than postponing them until problems worsen. "You've got to give Otellini credit for taking the bull by the horns and understanding the environment today," Feibus said.

Feibus expected job cuts across the board at Intel, saying design, marketing and other teams all are disproportionately large compared with those of competitors.

CNET's Stephen Shankland contributed to this report.

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