As Intel spent the summer showing off an impressive product overhaul, a cloud hung over it: How big would impending cuts be? The answer came last week--it will shed 10,500 jobs, about 10% of its workforce, through layoffs, attrition, and the sale of underperforming units.

Intel expects to save about $5 billion over the next two years with the cuts. CEO Paul Otellini promises a "more agile and efficient" company, getting to about 92,000 employees by next year.

The cuts come as Intel struggles amid a price war with rival Advanced Micro Devices. Intel's share of the x86 microprocessor market fell to 73% in the second quarter from 82.2% a year ago, Mercury Research says.

Intel also overhauled virtually its entire processor portfolio this summer. And last week it introduced the first dual-core versions of its high-end Itanium processor and made available its vPro PC platform for businesses with embedded management and virtualization features. In this market, Intel's going to have to be both efficient and smart.