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Intel To Cut Costs To Tune Of $1 Billion

Intel, the world's biggest chipmaker, will seek cost cuts of $1 billion in its most sweeping reorganization in two decades, president and chief executive Paul Otellini said April 27. Otellini told analysts that details of the plan would be unveiled in the coming months.

"It is the first time since the mid-1980s that we've been evaluating the company in this scale and in this level of details," he said. "All parts of the company are included in the evaluation." Otellini said the effort would target "nonperforming" sectors of the company as part of a move "to restructure, repurpose and resize Intel. The goal is a leaner, more agile, more efficient company."

Intel is expected to seek $300 million in cuts from 2006 investments. There was no indication of any job cuts from Intel, which employs some 99,900 people at 199 sites.

The move comes after Intel last reported net first-quarter profit fell 38% from a year ago to $1.3 billion on sluggish demand for personal computer (PC) chips. At the time, Intel extended its warning about lower revenues, saying it sees a drop of about 3% for its full-year 2006 sales compared with 2005 revenues of $38.8 billion.

The chip giant has taken its knocks this year as smaller rival Advanced Micro Devices has grabbed market share. Intel is betting on a product overhaul to stave off market share losses to AMD, which beat Intel to market last year with a key technology that puts two processing engines on a single chip. That helped AMD gain a bigger share of the lucrative server market.

Copyright Agence France-Presse, 2006

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