Intel Cuts Outlook, Plans Restructuring

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In January, Intel said that its revenue would jump 6% to 9% this year, but on Thursday it revised that number to a 3% drop, prompting CEO Paul Otellini to comment: "Itis a much tougher 2006 than we thought a few short months ago."

According to The Wall Street Journal (subscription required), Mr. Otellini said the company will cut US$1 billion in spending this year and will restructure its entire operations, with the potential for layoffs among its 100,000 employees. He noted that the company is in the midst of a 90-day review of its operations, but it will act on initiatives sooner than that.

Intel is facing not only PC industry growth that will be in the single digits this year but also increased competition from AMD, which was able to cut Intelis market share to below 80% in the fourth quarter of 2005. Mr. Otellini said he is banking on competitive new products from his company to change that situation.

He made no mention of Intelis relationship with Apple in the article. While Apple has seen its Mac sales jump over the past year, the company wonit likely make a large impact on Intelis business unless it sees very significant market share gains this year.

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