Needless to say that AMD has very tough times these days. Their market share decreases, they are continuously unable to launch their highly anticipated new products and they have been loosing money for five consecutive quarters already and this quarter will not become an exception. There are numerous reasons of the current state of the company, I will not touch them this time – there is no sense to discuss certain events that happened in the past and no one can change them. The most important question now is about AMD’s future. The company definitely has a lot of interesting products to offer, however, they sometimes cannot resolve their problems concerning technology and yields. Unfortunately, they continue to loose money from quarter to quarter and need to perform some actions in order to cut their expenses.

The most well-known method of cutting down the expenses you need to run your company is to outsource certain operations, to reduce the workforce and to sell subsidiaries and maybe real estate. AMD has nothing to sell at this point, except their head-quarters in Sunnyvale, California. They have already hired consulting firm McKinsey to help it sort through the options, according to Mercury News, and they will probably outsource a lot of operations to third-party companies. There are rumours that AMD is likely to move their headquarters to Austin, Texas, in order to receive additional revenue for selling the expensive real-estate in Sunnyvale, though, the company does not confirm anything. Today I also read at The Inquirer that Advanced Micro Devices will layoff certain number of their employees. The report was based on an internal letter from the CEO, Mr. Hector Ruiz, to all AMD employees.

A year ago the company already presented a restructuring plan with massive layoffs involved. The plan resulted in the reduction of approximately 2 300 direct manufacturing and related administrative support positions, or approximately 15% of AMD’s worldwide workforce, by the end of the second quarter of 2002. Approximately 1 000 of these positions were associated with closing Fabs 14 and 15 in Austin. The balance of the reductions also resulted from reorganising activities primarily in Penang, Malaysia. The company does not indicate the cost of this workforce reduction, but I am quite sure that there were a lot of money paid for the former employees.

Analysts now predict that the Sunnyvale, California based CPU maker can layoff from 10 to 20% of the worldwide staff now. They do not tell us which positions are likely to be reduced, unfortunately. At least, I hope that the R&D team will remain untouched this time. Nevertheless, I should point out that the company will need to spend additional money to pay the former members their compensations. Therefore, do not expect AMD to become profitable in the nearest quarter or two – all the money they earn they will invest in the restructuring of the company.

The official statement concerning the matter will be issued very soon. Stay tuned.