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Advanced Micro Devices on Thursday said it would reduce its headcount by as much as 15% (or by 1755 employees) and will also consolidate its sites as it now enters the second restructuring in a year. Sales of the chips are dropping these days, which is why the firm needs to cut its cost dramatically here and now.

Hard Times

AMD today announced revenue for the third quarter of 2012 of $1.27 billion, a net loss of $157 million, or $0.21 per share, an operating loss of $131 million and gross margin of 31%. For the fourth quarter of 2012 the company expects revenue to drop 9% sequentially, ±4%. Operating expenses are projected to stay flat with the current quarter.

“The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD. It is clear that the trends we knew would re-shape the industry are happening at a much faster pace than we anticipated.  As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model. Our restructuring efforts are designed to simplify our product development cycles, reduce our breakeven point and enable us to fund differentiated product roadmaps and strategic breakaway opportunities,” said Rory Read, president and chief executive of AMD.

New Restructuring

In a bid to overcome today’s challenges, AMD AMD is putting in place a business model to break even at an operating income level of $1.3 billion of quarterly revenue. The company is targeting to achieve this by the end of the third quarter of 2013. AMD’s restructuring plan will include a 15% workforce reduction, which is expected to be largely completed already in Q4 2012, and site consolidations. AMD implements the new plan to improve cost structure and to enhance the company’s competitiveness in core growth areas, including low-power and ambidextrous architectures.

“Our restructuring efforts are decisive actions that position AMD to compete more effectively and improve our financial results. Reducing our workforce is a difficult, but necessary, step to take advantage of the eventual market recovery and capitalize on growth opportunities for our products outside of the traditional PC market,” said Mr. Read.

While it is obvious that AMD needs to either save or borrow the money somewhere, it is pretty evident that without people AMD will not be able to deliver high-quality products. Just a little after the merger between AMD and ATI Technologies, AMD’s headcount was 16500 (of which around 2800 were employed at the fabs in Dresden, Germany), which means that the company needs headcount of around 13700 in order to create and sell leading-edge accelerated processing units, central processing units and graphics processing units. Meanwhile, the company will now have less or around 10 000 people, which may simply be not enough to deliver quality products in time.

AMD’s Q3 of 2012 in Details

Computing Solutions segment revenue was $927 million, down 11% sequentially driven primarily by a weaker consumer buying environment impacting sales to OEMs as well as lower ASPs for microprocessor products across all geographies. Computing Solutions operating loss was $114 million, down $196 million from the previous quarter net income primarily due to lower revenue and the $100 million inventory write-down.

Client product revenue declined 11% sequentially due to lower unit shipments and ASPs in the quarter especially for desktop processors. APU shipments were flat as a percentage of AMD’s client products. Server processor revenue declined sequentially due to lower unit shipments and ASP quarter-over-quarter. Chipset revenue declined sequentially primarily due to lower unit shipments in the quarter.

Graphics segment revenue was $342 million, down 7% compared to the prior quarter. GPU revenue was down 14% sequentially due to lower unit shipments to OEMs partially offset by higher channel sales. GPU ASP was up compared to the prior quarter thanks to continued transition to Radeon HD 7000-series with GCN architecture. Graphics segment operating income was $18 million, down $13 million from the prior quarter primarily due to the decline in revenue.

Tags: AMD, ATI, Business

Discussion

Comments currently: 39
Discussion started: 10/18/12 07:39:47 PM
Latest comment: 10/22/12 08:10:33 AM
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1. 
Nv has 7000+ people on payroll and ~1B$ income per each quarter.
It means that AMD is mistargeting at ~10000 people and 1.3B$.
With "40 to 50 percent" of AMD's future business will not be focused on PCs" as Rory said a few times and with low power and low performance products the both should be much lower.

BTW, what level of enthusiasm enthusiasts should have to buy server and desktop AMD cpus?
3 3 [Posted by: Azazel  | Date: 10/18/12 10:44:40 PM]
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2. 
Rory and Liza mentioned Kabini, which is just a 28nm shrink of Brasoz, a few times, but nothing was said about Kaveri and Vishera.
3 3 [Posted by: Azazel  | Date: 10/18/12 10:48:27 PM]
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No its not a shrink of Brazos, its a totally revamped core called Jaguar already mentioned to the press in the last quarterly earnings.
7 0 [Posted by: vanakkuty  | Date: 10/19/12 01:00:00 AM]
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show the post
0 3 [Posted by: Azazel  | Date: 10/19/12 08:08:05 PM]
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3. 
Read has brought in a team of business consultants from McKinsey & Company and BCG (the former Boston Consulting Group) to advise the company on how to fix its business model.
The most idiotic move I ever heard of.
If CEO doesn't know how he should restructure the company who needs Rory?
7 2 [Posted by: Azazel  | Date: 10/19/12 12:49:26 AM]
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Yup he is an idiot, he wont be there for long. He still hasn't touched the vast number of VPs they have pointlessly for a company thats 1/10th of Intel and Intel only have 30-40 VPs for the various divisions. AMD has a cancer and its not their products its these thieves who called themselves management with the bigger crooks being the board of directors. They hired him after all.

The whole house needs cleaning out. The engineers are the only valuable assets in there everyone else is just junk.
9 0 [Posted by: vanakkuty  | Date: 10/19/12 01:04:40 AM]
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@Azazel - And you would be suitably qualified to say that since you have had previous experience yourself restructuring a mult-billion dollar cap company before, right?
4 6 [Posted by: linuxlowdown  | Date: 10/19/12 06:30:17 AM]
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@linuxlowdown.
Do you really think that BoD of AMD needs clever people in AMD management?
1 3 [Posted by: Azazel  | Date: 10/19/12 08:04:34 PM]
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One man can't run a corporation by himself. I see it as having enough humility to ask for help on the prospect of rebuilding a company from just about the ground up. Any CEO for any corporation in any industry when faced with such a daunting task of rebuilding a company inside and out would hopefully use the resources provided to them internally and it they need extra help find consultants externally to provide expertise as well. It is called smart corporate governance, and in this case it looks like Rory has his work cut out for him.
2 1 [Posted by: veli05  | Date: 10/19/12 08:23:24 AM]
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4. 
AMD knows its APU chip is a joke from number of cores and high speed but perform like a little kid who demand manhood level job. so now is the time to trim the workers and hope to start from step zero and get ahead in the next few years on performance.

it won´t change much from today´s APU because the APU designers and the bosses are not going out only the small workers are being trimmed.AMD need anInjection of INTEL designer´s gene into the IPC department.

3 2 [Posted by: idonotknow  | Date: 10/19/12 01:47:38 AM]
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AMD knows its APU chip is a joke from number of cores and high speed


AMD launches the AMD Fusion Family of APUs – which consist of both a CPU and powerful GPU on a single die – marking perhaps the greatest advancement in processing since the introduction of the x86 architecture more than 40 years ago. As of the second quarter, AMD shipped more than 12 million APUs.


12 million people beg to differ.

http://www.amd.com/us/abo...ation/Pages/timeline.aspx
2 2 [Posted by: veli05  | Date: 10/19/12 08:49:25 AM]
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5. 
the next chip AMD should give it feature as 36 cores at 6 Ghz AMD probably clear their inventory for a few days atleast until the people realize the perfoprmance is a joke. if it´s going to be a jokr why not name it a more super power features. who´s going to be able to verify the features in those 20+ nm scale. AMD name it a feature and knowing no one can dispute it so just make a bigger joke if it 8 cores and 4 Ghz is nothing real than might as well name it 36 cores at 6Ghz. to make it more superior to INTEL´s chip.
1 3 [Posted by: idonotknow  | Date: 10/19/12 03:19:15 AM]
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6. 
Article statement: "... which means that the company needs headcount of around 13700 in order to create and sell ..." - are you mad ?
What sales, marketing, press-relationship workers have in common with chip design ? NOTHING. NVidia have only 5-6k workers and have more and better products than AMD.

AMD want to 'lower breakeven points'. This means spending less money on chip design and reuse some common blocks in many diffrent products. This is road to fail. Chip design is more and more complex and expensive, ask Intel for that. Intel have high breakeven points, but his CPU are great, so they have high profit. AMD will design even more failed chips than Bullshit, because you cannot make great chips for pennies.
3 0 [Posted by: Tristan  | Date: 10/19/12 03:23:44 AM]
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7. 
enough bashing AMD features i might as well skip lunch for a long time just saving enough to get the 8 core 4 Ghz fx-8350. if it needs i should skip dinner as well. hate those big feature joke so i´ll have to buy one to show how superior my new AMD system can beat my old crappy i7 920 which was obsoleted in a long time already.

3 1 [Posted by: idonotknow  | Date: 10/19/12 03:26:23 AM]
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8. 
Where on earth is the biggest AMD kiss-@$$ named beenthere?!? With all the crap that he's been putting here.. "AMD has sold millions of APU and they will be profitable in a few months..." type of bull$hit! Oh, I forgot, he has his thumb up the @$$ of the likes of linuxlowdown so thats why he can't type!

AMD is marching to it's grave... just give it time... they'll get there!
4 4 [Posted by: dudde  | Date: 10/19/12 06:55:09 PM]
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1 3 [Posted by: kailrusha  | Date: 10/20/12 05:36:04 PM]
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show the post
0 3 [Posted by: dudde  | Date: 10/21/12 06:41:13 PM]
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9. 
WOW The quality of this site has been going down since JMLXG & AVONX started sprouting their rubbish. These twins are the same person but with a few accounts. Comon XBit! Suspensions or bans are long over due

Its the same trolls from Fudzilla
3 3 [Posted by: keysplayer  | Date: 10/20/12 12:09:44 PM]
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How can you suspend them if they said are true. unlike your post in

"AMD Considers Its Chances: Outlines Three Growth Opportunities."

Thats a true Rubbish
1 3 [Posted by: kailrusha  | Date: 10/20/12 01:58:24 PM]
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