Intel, HP, Dell merge and share their core competency in reducing headcount
Eventually they reduce it to only 3 - all joint CEOs - and still aren't profitable
Intel plans to cut its workforce by approximately 5,400 employees this year, a company spokesman told The Reg. After the workforce reduction was revealed by Reuters, Intel senior manager of corporate and financial PR Chris Kraeuter confirmed to us that there will be a reduction of "about 5 per cent" of the company's 107,600 …
If the management have confidence that they are doing the right thing then they will report reduced profits and look the shareholders square in the eye and promise that this is a short dip, with a rosy future just around the corner.
If they don't have confidence in what they are doing then they know the shareholders must be placated otherwise they will ask embarrassing questions and start demanding management changes.
Intel's recent attempts at mobile have been embarrassing and half baked. They just cannot stop the slide when they come up against ARM. Now ARM is threatening servers too.
Intel management have not worked out their future well enough to face a hostile bunch of shareholders. Thus there is only one thing they can do: cut costs drastically to keep the numbers looking reasonable.
"Intel management have not worked out their future well enough to face a hostile bunch of shareholders. Thus there is only one thing they can do: cut costs drastically to keep the numbers looking reasonable."
Maybe. In my view firing a few peons is merely window dressing to buy time. The solution (that Intel have long known about) is simply to buy ARM. ARM market cap is a tenth of Intel's, so it's an easy buy. US competition authorities won't say no to a major US corporation buying some foreign outfit. The UK government and competition authorities would enthusiastically say yes (speaking as a Briton, I think the evidence is clear that our governments of all political persuasions would happily sell their own grandmothers if they could find a buyer).
Corporate customers would hate it, but it's not like they've got that many alternatives, and even then if Samsung or TSMC complained, would the US or British government listen? I think not.
The only people likely to oppose it are the EU competition authorities (one of the very, very few areas where the EU generally do a good job). But if the US government lean on the spineless national governments of Europe, I'm sure the EU competition overlords would come to their senses and rubber stamp the deal. Within a few months ARM's design skills and IP will be shipped out to the US, the UK R&D would be shut down, and we'd be like the Finns, trying to remember the days when we had a world leading tech business, and wondering how and when it all went wrong.
But from another point of view it might make sense. Look at Dell for example, they ignored their shrinking sales for so long they are now having to make huge, quick (read expensive) forced cuts which is good for nobody. Intel on the other hand are just making proportionally small cuts which can hopefully be done via people leaving normally (retirement, pissed off with the job) and at worst voluntary redundancies. Which would you prefer as an Employee? No it is not good news but it surely would be worse if they left it for 5 years and flooded the jobs markets with 100,000 people looking for what is likely quite specialised work.
I know from friends in Germany (and it's now public) that Intel are closing the IGRC R&D centre in Braunschweig which worked on things like the advanced high-speed on-chip networks used for multicore CPUs and was their biggest design centre in Europe. This suggests that they are indeed having to cut back on expensive R&D as their CPU revenues fall, though their choice of which group to can raises some interesting questions about their strategy for the future...
"their choice of which group to can raises some interesting questions about their strategy for the future..."
Their strategy, if it exists, has no credibility outside the outdated markets of desktop and datacenter x86.
Name two non-x86 successes in the last two decades. If you wish, consider products from companies they've bought (Wind River, McAfee, Virtutech, etc).
Intel. The x86 company.
"I'd like to clarify that we are not announcing a layoff. Business groups are developing plans to reduce spending and this will include some reduction in headcount..."
Interesting! So what does "reduction in headcount" mean? How much ever positive spin Intel tries to give this news, it is still layoffs.
"...When we talk about reduction of the workforce there are a number of things that can happen. It could include redeployments, ... , and through attrition. ... Our usual rate of attrition is close to 4 percent worldwide."
Companies should be investigated for forced "redeployments" and "attrition". The trick these companies use is to make it so difficult for employees to work (by inducing mental stress/torture) that they leave the company. This is "forced attrition". Redeployment is one of the methods to induce attrition. There are other ways used too. This is done to avoid severance pay. I have seen this from very near.
The new Intel CEO Brian Krzanich has a production background. He is unfamiliar with R&D activity, where teams and individuals try to do new, never-done-before things, using a wide variety of unique tools and processes. It will be his inclination, based upon many years of experience, to trim activities that are perceived to have a low probability of success, to streamline the creative processes that lead to innovation, and to cut funding to activities that appear to be inefficient. Many Intel watchers have been predicting a move by Intel to centralize R&D facilities and activities, for the sake of efficiency, as well as a reduction in longer-term R&D funding. Paul Otellini did not have an exceptional technical background, but was personally fascinated by innovations that could enable new products and higher performance. From outside appearances, Krzanich is not similarly fascinated. It will be interesting to see what new technologies Intel can demonstrate at future IDFs (Intel Developer Forums) or if IDF gatherings continue to be sponsored at all.
"a production background. He is unfamiliar with R&D activity, where teams and individuals try to do new, never-done-before things, using a wide variety of unique tools and processes."
Bit like Bob Palmer in charge at DEC then. That worked well for everyone didn't it.
I am fucked off with every large firm constantly cutting staff, or having the sword of damocles hanging over their heads with the threat of 'save money or lose your jobs'.
Seriously - when are these 1% wankers going to wake up and realise the value creators in the organisation are the people and their skills and ideas, not the Executive wankers hacking them down.