Intel to cut jobs and loss-making divisions

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: Intel Corp. may trim staff and jettison money-losing divisions to help boost its sagging stock and fend off competition from arch rival AMD, analysts say.

Speculation has been building about a possible shakeup at the chip-making giant. In recent days, publications in Oregon and India, home to portions of Intel's 100,000-person worldwide workforce, have run stories about local layoff jitters.

Intel had no comment, but a spokesman said management has promised investors the biggest top-to-bottom review of operations in 20 years— which coincides with the mid-1980s, when it quit the money-losing memory chip business and instituted its last company-wide layoffs.

Now analysts say Intel is again ready to exit unprofitable businesses—such as flash memory for digital cameras and a line of communications products—and may have to trim staff first in order to make them saleable.

“There is a general expectation in the analyst community that Intel is going to get out of a few areas,” said Linley Gwennap, who runs his own microprocessor consulting firm. He said Intel will move as quickly as it can to complete the reorganization. “It can't be good for employee morale,” he said of the layoff talk.

As for prospective buyers, analysts were dubious. “If I came to you and said, “Here’s a business for sale and, oh, by the way, and it's losing money,” what would you say?” asked Martin Reynolds, senior analyst for Gartner in San Jose.

Intel chief executive Paul Otellini ignited the sell-off speculation recently when he reacted to a disappointing first-quarter earnings report by promising that he would take a hard look at “anything with a bracket on it,” a reference to the practice of putting losses in parentheses on financial statements.

Intel subsequently put flash memory fabrication plants in Santa Clara, Calif, Israel and Ireland together with marketing and other functions so as to make that business unit more saleable.

Intel’s last big cuts came after the dot-com crash, when it eliminated 11,000 jobs in less than two years to bring its headcount down to 79,000 in 2002. That was through attrition and buyouts. Its last massive job cuts occurred when it quit the memory business to focus on microprocessors — and shrank from 25,400 employees in 1984 to 18,200 in 1986.

Exactly what Intel will do and when remains a guess. Its operations are so far-flung that any layoffs would be dispersed. A spokesman would not break out employee counts by business unit.