Intel online services group sheds workers

Intel is shuffling employees out of its online services group as the company continues to retrench and get back to basics.

Hundreds of employees inside Intel's online services division have been "redeployed" or told to find new jobs, according to sources at the company. Redeployment notices went out on Monday. Sources estimate 400 to 600 employees were affected.

Although jobs are being cut in a number of divisions, the company's relatively small services divisions seem to be experiencing a good share of activity. The Santa Clara, Calif.-based chip giant created its New Business Group in the heady days of 1999 as a way to get into Internet-related businesses that do not center on semiconductor manufacturing.

Intel Online Services, which provides Web management services and competes against companies like Exodus Communications, was one of the division's first, and largest, creations.

Many of these efforts, though, have failed to catch fire. In February, the company shut down Intel Media Services, which planned to host streaming video events. Roughly 200 employees were redeployed after it was closed.
Icat, an e-commerce hosting service, was also closed in February.

During the same month, CEO Craig Barrett admitted that "revenue per customer was less than anticipated" from online services and that investment in the division would be recalibrated accordingly.

Under redeployment, employees continue to receive salaries but spend most of their time looking for a new job, either inside or outside of Intel, according to a company representative. After two to four months, employees who do not find other jobs are given severance packages, the representative said.

The representative confirmed that employees in online services, among other divisions, have been placed in the redeployment pool, but declined to provide a number.

The employee shuffle is part of an effort to eliminate approximately 5,000 jobs. Roughly 1,100 jobs are being eliminated with the closure of a plant in Puerto Rico. The remaining 3,900 cuts are expected to come through attrition and programs encouraged to get employees to accept severance packages.