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Advanced Micro Devices late on Thursday confirmed massive layoffs and reorganization as well as implied rather tectonic shift in its strategy. The firm plans to reduce the workforce by around 15% and intends to rebalance its workforce to better respond to modern market challenges. The massive layoffs will help AMD to ensure its profitability going forward, even in case the company decides to stick to low-profit margin business.

"Reducing our cost structure and focusing our global workforce on key growth opportunities will strengthen AMD's competitiveness and allow us to aggressively pursue a balanced set of strategic activities designed to accelerate future growth. The actions we are taking are designed to improve our ability to consistently address the needs of our global customer base and stake leadership positions in lower power, emerging markets and the cloud," said Rory Read, AMD president and chief executive officer.

AMD expects that these combined actions will create a more competitive cost structure and rebalance the company's global workforce skillsets, helping AMD to continue delivering industry-leading products while improving productivity, reducing time-to-market and better aligning with key industry trends that are expected to drive growth. The company expects to reinvest a significant portion of the savings to fund initiatives designed to accelerate AMD's strategies for lower power, emerging markets, and the cloud. 

"AMD's plan to accelerate its strategies for the development of lower power devices for the emerging mobile market, and the interconnect between such devices and the cloud in the next year is the right thing for the company to be doing. The shift in consumable media on highly portable devices like tablets is an unmistakable and unstoppable trend, and one which the BOD of AMD was afraid they might have missed. This is a clear declaration that AMD intends to be a participant and I think they have the technology to do it," said Jon Peddie, the principal analyst at Jon Peddie Research.

AMD expects that the restructuring plan will result operational savings of approximately $10 million in the fourth quarter of 2011 and $118 million in 2012, primarily through a reduction of its global workforce by approximately 10% and the termination of existing contractual commitments. The workforce reduction will occur across all functions globally and is expected to be substantially completed by the end of the first quarter of 2012. Based on anticipated savings from the restructuring plan, AMD expects fourth quarter 2011 operating expenses will be approximately $610 million.

As a result of implementing efficiencies across the company's operations, AMD expects to save approximately $90 million in 2012 operating expenses in addition to the restructuring plan savings, resulting in more than $200 million of expected combined operational savings in 2012. The savings were not necessary and may play a bad joke with AMD. At least, analyst Jon Peddie believes that the company was already lean.

"AMD was far from fat. And they were making a profit. I don't see any need for such a huge cutback," said Mr. Peddie.

Tags: AMD, Business, Bobcat


Comments currently: 14
Discussion started: 11/03/11 07:19:39 PM
Latest comment: 11/07/11 11:26:34 AM
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They have a lot of cash flow problems competing with Intel and nvidia, both of whom have billions and no debt.
0 0 [Posted by: beck2448  | Date: 11/03/11 10:21:14 PM]

The sad thing about the slow-motion train crash that is AMD, is that it will drag down a quality graphics card business with it.
0 1 [Posted by: qd50  | Date: 11/04/11 03:50:12 AM]
- collapse thread

Or sell it. There are some around the globe who wish to buy it.
0 2 [Posted by: Azazel  | Date: 11/04/11 04:24:08 AM]
True, as long as AMD hasn't integrated (tainted) ATI too much.
0 0 [Posted by: qd50  | Date: 11/05/11 05:06:30 PM]

This may or may not make sense for AMD shareholders, but either way it looks like bad news for high end PC users. From this and the general tone of AMD commentary recently it looks like they are giving up the high end race against Intel, which good business move for AMD or not will give Intel an unchallenged monopoly in the high end space. We have already seen that Intel will overcharge and under-innovate dramatically if allowed to. Sad times.
2 0 [Posted by: Prosthetic_Head  | Date: 11/04/11 05:53:27 AM]
- collapse thread

I agree it's sad if AMD drops completely out of the high end race (instead of just failing to get there), but the only time AMD was competitive with Intel that caused high end CPU prices to go from ~$300 to ~$1000, so I can't see AMD's influence in this market as being really positive. The only example I can think of Intel losing its touch is the Pentium 4 and derivatives, and AMD has stuck to basically the same core for much much longer. Bulldozer is a nice attempt to do something new, but unfortunately it looks like it wasn't successful in putting AMD back on the map.
0 0 [Posted by: ET3D  | Date: 11/04/11 07:44:03 AM]

Quite a suprise that in Q2-2011 AMD had ~11100 people on the payroll. As of Oct,1, AMD had already 12019 according to SEC filing. Looks like during CEO-less time AMD worked as cooperative farm.
0 1 [Posted by: Azazel  | Date: 11/04/11 11:22:33 PM]


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