Turnaround Talk Lifts Intel

Faced with slowing PC demand, eroded market share and an inventory glut, Intel's top brass outlined a comeback plan Thursday.

Speaking at the company's spring analyst day event in New York, Intel's executives detailed the company's recent travails, and vowed to turn things around by transforming the 100,000-employee company into a leaner, more agile operation.

"We are very well aware of the realities of our current and future business outlook," said CEO Paul Otellini. "We are taking actions to address those realities."

Besides the already announced cuts of more than $1 billion from 2006 spending, Otellini pointed to an internal review process designed to "restructure, resize and repurpose" the company, hinting that significant layoffs could be in the offing. Other cost cuts could embrace more than just the headcount.

"In my mind, it would be way too simplistic to simply do a reduction in force," he said.

Shareholders liked what they heard, bidding up the stock 47 cents, or 2.5%, to $19.96 on Thursday. Intel remains down 20% from the start of the year and is 31% off its 52-week high of $28.84, hit July 19.

Intel's 90-day review will examine everything from employee productivity to nonperforming businesses and capital efficiency, said Otellini.

The first actions resulting from this review process will occur as soon as they're fomulated, he said, while other actions could stretch into 2007.

Meanwhile, Intel executives said the company's market-share losses would bottom out in the current quarter, with gains returning this summer.

"We're poised for a second half rebound in [server] share," said Anand Chandrasekher, the general manager of sales and marketing.

With its stock trading near a 52-week low, Intel has struggled in recent months. Although the company supplies microprocessors to roughly 80% of the worldwide PC market, it has steadily lost market share to rival Advanced Micro Devices, whose current line of processors are considered superior to Intel's on a performance and power-efficiency basis.