Intel has recorded Q4 revenue of USD 9.7 billion representing a gross margin of 49.6 per cent, up from Q3's 49.1 per cent. "Intel's product and technology leadership yielded a strong fourth quarter with higher selling prices and record unit shipments in the fastest growing segments of the market," said Intel president and CEO Paul Otellini.
Intel managed to reap a revenue of USD 4.9 billion in revenue from Asia-Pacific, USD 2 billion from America, USD 1.9 billion from EMEA and USD 936 million from Japan.
In September 2006, Intel had announced plans for restructuring following an analysis of the company's structure and efficiency. As a result of the restructuring, the company expects to generate savings in costs and operating expenses of approximately USD 2 billion in 2007. In 2008 the company expects savings from this restructuring to grow to approximately USD 3 billion annually.
The savings are a combination of non-workforce related steps and a significant reduction in Intel's workforce. The company's employee base will be trimmed to 95,000 by the end of2006, resulting from workforce reductions, attrition and previously announced actions. The workforce will decline to approximately 92,000 by the middle of 2007. In addition to the savings from the workforce reduction, the company expects savings in merchandising expenses, capital and materials.
"These actions, while difficult, are essential to Intel becoming a more agile and efficient company, not just for this year or the next, but for years to come", said Paul Otellini, Intel president and chief executive officer.
Most job reductions this year will occur in management, marketing and information technology functions, reductions related to the previously announced sale of businesses, and attrition. In 2007, the reductions will be more broadly based as Intel improves labour efficiency in manufacturing, improves equipment utilisation, eliminates organisational redundancies, and improves product design methods and processes.
Intel is hoping that its restructuring and layoffs will have the same result that HP's 15,000 jobs cuts had on the company, said Roger Kay, an analyst with Endpoint Technologies Associates. HP's profits have returned just over a year after it downsized, and its stock price has also improved.
Kay said, "This is the other shoe dropping." Intel's partners and customers will at least have the uncertainty removed from their dealings with the company, which is no consolation to the Intel marketing employees about to learn their fate, he said.
The restructuring saga has not come to an end, as Intel CFO Andy Bryant revealed that he's still looking for another USD 1 billion in capital expenditures savings improvement through the implementation of additional "efficiencies."
Bryant said. "we have seen capital savings out of this program earlier than we anticipated. But it doesn't mean we've said it's pulled in. Our expectation is to go and find a billion dollars in addition in '08. So whatever savings I get before then, we're going to take to the bank, and then we're going to go see if we can still get another billion dollars."
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