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AMD restructuring targets 700 layoffs

Posted: 17 Oct 2014     Print Version  Bookmark and Share

Keywords:layoff  AMD  computer  graphics 

Advanced Micro Devices announced it will lay off 700 of its more than 10,000 staff by the end of the year. The layoffs are part of the company's $70 million restructuring effort to save about $94 million in the next 15 months.

The news comes as the company reported a third quarter in which it edged into the black with a $17 million profit on revenues that fell slightly to $1.49 billion. However, the company also reported it expects its fourth quarter revenues to fall 13 per cent.

The layoffs will come mainly from the "go-to-market" part of AMD's client computer and graphics division. It will not involve cutting any product lines.

Lisa Su, AMD's recently named president and CEO, noted in the press release:

Our Enterprise, Embedded and Semi-Custom segment results were strong; however, performance in our Computing and Graphics segment was mixed based on challenging market conditions that require us to take further steps to evolve and strengthen the financial performance of this business...

While decisions that impact the size of our global team are never entered into lightly, this is the right step to ensure we prioritise our resources and engineering investments in our highest-priority opportunities that can drive improved profitability and long-term growth.

The expected revenue declines next quarter will come mainly from sales of game console chips which peaked in the third quarter in the ramp of Microsoft and Sony systems for holiday sales. The good news is AMD secured in the quarter two deals to design new semi-custom chips, one its first for a 64bit ARM chip.

AMD expects the two wins will generate $1 billion in revenues over three years starting in 2016. Su would not say what the systems were, but observers speculated one could be a Nintendo game system and the other AMD's first non-console, semi-custom deal.

Su was asked in her first quarterly earnings call with analysts what she expects her imprint will be on the company.

"You will see more focus on the technology and products," she said. "I'm going to focus on leadership products and differentiation – there's a lot of opportunity, and this is a multi-year transition that will pay off in the next couple years," she added.

In its latest quarter, AMD's computing and graphics revenue fell to $781 million, 6 per cent from the prior quarter and 16 per cent from the same quarter last year, with notebook chips suffering the biggest losses. The group lost $17 million, compared to $6 million in the prior quarter and $9 million a year ago.

Average selling prices of client processors have gone up due to a shift to notebook sales, but GPU prices declined.

Increased sales of semi-custom SoCs drove sales to $648 million, up 6 per cent over the prior quarter for AMD's other division, which encompasses a broad range of embedded, server and other and enterprise chips. The semi-custom chips are one of AMD's current bright lights, a market Su vowed to expand.

The news continues the ongoing turnaround at AMD since former CEO Rory Read joined the company in late 2011. AMD has long struggled to carve out a solid No. 2 slot in x86 chips next to its giant rival Intel. In its new incarnation AMD essentially fights on two fronts, facing a slate of ARM SoC vendors in embedded markets in addition to Intel in computing.

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