Intel Corp (INTC)

[Tenchu]

Chipguy,

A 5% layoff isn't a financial measure, it is a clear message to every employee to get their ass in gear. It is also a useful opportunity to cull the lowest performing 5% of the herd.

I hate to say this, but it rarely works out that way.

A 5% reduction in personnel usually doesn't mean layoffs. It usually means hiring freezes and relying upon redeployment pools more often than external hires.

Who enters redeployment? On some occasions, the "lowest performing" portion of a team will be put into redeployment, but more often than not, it's entire teams that get put there for various reasons.

For example, Intel is closing its site in Dupont, WA because frankly it was a boondoggle. The 700 employees there, if they want to stay with Intel, will have to enter the redeployment pool, but I figure most of them will look for new jobs outside of Intel. (The reason why they wanted to work in Dupont in the first place, rather than, say, Oregon, is because they have local connections there.)

As for the rest of the employees within Intel, they're less likely to get lucrative raises or stock benefits during those periods when Intel is trying to reduce headcount. You would think otherwise since it's in Intel's best interest to retain top talent, but in company that has grown to over 100K employees, it just doesn't work that way.

In any case, I don't think this 5% reduction in the workforce is a big deal. The question is whether Intel is making the best use of the 100K employees that they already have, and whether Intel is still retaining or even attracting top talent.

Tenchu