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Mandatory pay cuts for everyone else in North America

Embattled AMD will cut 1,100 people and impose mandatory pay cuts on all North American employees. The figure is approximately 9 percent of its global workforce. The good news is that some of the layoffs will come through attrition, so not everyone will be seeing pink slips.

The cuts start from the top, as Executive Chairman and former President Hector Ruiz will see a 20 percent cut in his salary. Many analysts and investors blame Ruiz as the cause of the downfall of AMD, which for a time held a sales and technology lead over Intel in several key sectors. After his seventh consecutive quarterly loss, he was replaced as CEO by Dirk Meyer, who will also see a 20 percent pay cut.

Senior North American executives that are vice presidents or higher will see a 15 percent pay cut. Salaried workers will see a 10 percent cut, while hourly workers will face a 5 percent wage reduction. AMD will also halt its 401(k) matching program.

Last month, AMD took a $70 million charge after laying off 600 workers.

Longtime veterans of AMD have been longing for the good old days of Jerry Sanders, who led AMD for over 30 years. Despite going through several difficult recessions, he often refused to lay off employees, having seen the effects of layoffs that had occurred at Fairchild Semiconductor. Instead of cutting employees, he instituted efficiency programs, such as working on Saturdays and longer shifts.

AMD will also take an additional $622 million write-off on its purchase of ATI, after a $800 million impairment charge last year. AMD paid $5.4 billion to takeover ATI, which it sees as critical in its plans for Fusion products to compete against arch nemesis Intel.

Many layoffs have been announced in the last month, including Logitech, Seagate, and mighty giant AT&T. Earlier today, Circuit City announced that all 30,000 employees will lose their jobs.

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Hang in there AMD!
By RaistlinZ on 1/16/2009 10:35:51 PM , Rating: 2
I hope they don't go the way of Circuit City. The first computer I ever built was an AMD.

RE: Hang in there AMD!
By FaceMaster on 1/16/09, Rating: -1
RE: Hang in there AMD!
By jadeskye on 1/16/2009 10:55:09 PM , Rating: 3
I fear that may be a little too optimistic but the Phenom II X4 is deffinately a gigantic step in the right direction.

RE: Hang in there AMD!
By FaceMaster on 1/16/09, Rating: -1
RE: Hang in there AMD!
By rudolphna on 1/16/2009 11:36:26 PM , Rating: 4
Are you serious right now? Yes. They have performance near or equal to the Core 2 Quads, and overclock just as good, at better price points than their intel counterparts.

RE: Hang in there AMD!
By kilkennycat on 1/17/2009 12:31:52 AM , Rating: 3
It is strongly rumored that Intel is about to cut their Core 2 Quad Penryn prices and squeeze AMD's PhenomII margins ..... For example, the Q9550 is superior in performance to the X4 940 and is expected to drop in price from ~ $316 to ~$267... And the Q9650 is expected to drop from over $500 to ~ $330.

RE: Hang in there AMD!
By gevorg on 1/17/09, Rating: 0
RE: Hang in there AMD!
By kilkennycat on 1/17/2009 3:14:09 AM , Rating: 3
Core 2 (Penryn) does not need higher-priced motherboards nor DDR3. You are confusing Core 2 with the new Core i7 from Intel.

RE: Hang in there AMD!
By William Gaatjes on 1/17/2009 7:55:01 AM , Rating: 2
When it comes to real world performance and dragging large amounts of data around bigger then the 2 caches of the dual die penryn quad cores , the Ph2 wins.

RE: Hang in there AMD!
By William Gaatjes on 1/17/2009 7:57:25 AM , Rating: 3
And the cpu, motherboard + memory are more expensive then a comparable Ph2 offering. Don't believe all the fud. When you want the absolute best, go for the i7 965 core from Intel with matching motherboard and memory. When you want good for a low price go for the AMD Ph2.

RE: Hang in there AMD!
By atlmann10 on 1/19/2009 12:18:57 AM , Rating: 2
They have to Intel's largest competition is INTEL right now there latest core 2's are kicking there own a77. I want to build a new system this year myself. However if I do I am waiting for the Phenom2's with the AM3 chip set and DDR3, or I will build one on the new INTEL when they go to the dropped nm processors. I figure DDR3 and the X58 MB's should have dropped pretty well by then to. I imagine June to August when the price drop hits. I am also sure that sales in general are going to be slower than the norm because of the recession. Hopefully it means a double price drop for newer technology.

RE: Hang in there AMD!
By inighthawki on 1/16/2009 10:59:49 PM , Rating: 2
Im not sure if saying superior to intel's "best" offerings is quite accurate, but the phenom 2s are definitely not a bad chip.

RE: Hang in there AMD!
By bryanW1995 on 1/16/2009 11:06:21 PM , Rating: 2
What the hell are you talking about???? You need to slowly step away from the amdzone and return to reality. Phenom II is a step in the right direction, but it does no better than AT BEST get amd to parity with 45nm penryn-based cpus. Since those came out about 14 months ago, I fail to see how this puts them 3-4 AHEAD.

RE: Hang in there AMD!
By darkblueslider on 1/17/2009 3:51:38 AM , Rating: 2
Troll-feeding :D

RE: Hang in there AMD!
By jonmcc33 on 1/17/2009 2:33:37 PM , Rating: 2
Same here. It was a 1GHz AMD Thunderbird. Blazing fast computer at the time and easily overclocked to 1.4GHz. Ever since I switched from an AMD Opteron 165 to a Core 2 Duo E6400 I haven't even thought about AMD. E6400 overclocked over 1GHz and still runs ice cool at idle.

By Etsp on 1/16/2009 10:55:41 PM , Rating: 5
When a company does something like this, I'm all for it. It means the company will be more efficient for it.

When I hear about a company about to lay off 3,000 workers, while the executive compensation doesn't change, I get pissed.

In the end, the individual workers weren't the one that allowed the company to slip into a weakened position, but they are the first to feel the effects. That is backwards, and it is a practice that does nothing to promote action by the executives...

In AMD's case, it looks like this was absolutely necessary, but they offset the number of lost jobs by reducing the pay of top executives. I truly hope they recover.

By inighthawki on 1/16/2009 11:02:48 PM , Rating: 2
I do agree somewhat. While i do feel sometimes that the higher up executives do make a little too much, and should sacrifice a little to keep some jobs or up everyone pay just that little bit, the work labor is also some of the expendable labor. I don't know exactly which jobs get cut, but in general, when layoffs come, they lay off people because they can afford to. The employees entered into agreement knowing that the company can let them go at any time, and nothing states that the company has to act in a certain way.

By FITCamaro on 1/17/2009 12:31:45 AM , Rating: 2
Agreed. Any company that cuts employees and then the executives get a fat bonus check for keeping the stock price up should fire its executives. Because that's a sign they will only do as good a job as necessary to insure they get their bonus.

By cochy on 1/17/2009 1:08:07 AM , Rating: 2
Keep in mind this pay cut affects salaries only. No mention of bonus pay.

By Etsp on 1/17/2009 12:56:49 PM , Rating: 5
If an individual employee is not up to task as far as his job is concerned, then he should be replaced. Does that employee make that decision? No. It's management that makes that decision. Who decides what the management is supposed to do, and what policies they are supposed to enforce? The executives.

Yes, having bad low level employees sucks. But that's still the fault of the executives for not implementing a proper policy to deal with them, or not ensuring it's being enforced by the management they hired. Being at a high level job like that, with great benefits, means they should be also facing the risks in the market.

So, Comp USA and Circuit city going under was still the fault of the executives. Employee training and hiring policy are still decided by them. Poor customer service IS their fault.

I never said that lay-offs were inherently bad or evil, I simply said that if executives feel the need to reduce their work force, they should also feel the impact personally.

By FITCamaro on 1/17/2009 2:35:17 PM , Rating: 2
While an employee certainly should feel personally responsible for knowing how to do his job and knowing about the products they're selling, to me in the end it does come down to management. Good management shouldn't hire (or retain) employees who now only don't know what they're selling but also do not take at least a little pride in their jobs.

By FITCamaro on 1/17/2009 2:36:46 PM , Rating: 2
Let me also add that while obviously employee turnover should be kept under control, at least when I was working there, there was no shortage of people who wanted to. Teenagers loved working at Best Buy to get the discount on stuff.

By HrilL on 1/17/2009 1:03:33 PM , Rating: 2
You really don't know how things work. First off who does the hiring? The Management. Who hires the managers? The executives.

In the case of CompUSA and Circuit City you say the employees are partly responsible. While that may be true. It is the Managers and Executives jobs to hire these employees so the fault lies solely with them for not hiring good employees.

Circuit City started a downward spiral once they ended commission based sales for electronics and appliances. They lost there good and knowledgeable employees and replaced them with people that don't know anything at all. Sales staff at these kind of stores is the most important part of them since the only way the stores make money is by selling products.

You are so quick to defend these executives for their wasteful spending. We'll use the same example you said. The Auto executives flying to Washington. 3 different jets each costing about $30,000 or more to fly there. That could have payed 2 employees for a year.

What people are sick of is these guys making millions for grinding a company into the ground while the employees end up waiting in bread lines.

By Jovec on 1/18/2009 1:27:28 PM , Rating: 2
75% of layoffs are employees that should have been cut previously. It's excess fat (or bad business decisions) that has always been there. Equally ironic are company restructurings done by the same management staff that ran the company poorly enough to require one.

AMD cannot survive without a breakup or buyout
By Slappi on 1/16/2009 11:53:06 PM , Rating: 2
They will run out of cash in Nov of this year if they hit their estimates, which they won't.

No one will loan them money anymore and they have $4 billion in debt.

I cannot see how they will survive. They are going to be BK by this Summer unless they get a miracle.

Hate to see this happen to them but I can see no way out for them unless they sell ATI or are bought out completely.

By kilkennycat on 1/17/2009 12:40:01 AM , Rating: 3
Very rich Arabs and Chinese are helping to bail AMD out, between taking ownership of their fabs and loans to the core company. May see some fresh ethnic faces on the board of AMD before long, although both the Arabs and Chinese usually try to employ US-originated puppets on the boards and in the management of US companies in which they have large vested interests.

RE: AMD cannot survive without a breakup or buyout
By Viditor on 1/17/2009 7:01:59 AM , Rating: 2
They will run out of cash in Nov of this year if they hit their estimates, which they won't

Not true at all...
You are obviously going by their former cash burn rate which included the costs of Fabs...
Based on their costs (estimated) in their now Fabless state, they have enough cash for at least 2 years.

RE: AMD cannot survive without a breakup or buyout
By Slappi on 1/17/2009 8:58:12 AM , Rating: 2
I think a lot of you guys will be surprised.

That is INDEED their new burn rate after the sales.

They cannot survive in this type of economy.

Companies with large debt fail in tough economic times.

By Viditor on 1/18/2009 1:25:08 PM , Rating: 2 it's not.
Some things to keep in mind...

1. It costs about $1 Billion to design and develop a new chip line, but it costs about $4 billion to make the equipment to build that chip. AMD has made a well timed move here as they have vastly reduced their mandatory expenses during an economic downturn.

2. AMD will have a little over $2 billion in cash and equivalents after the deal, but their capex spending will drop from ~$1.7 billion/year down to near nothing.

3. The Foundry deal also cuts their debt by $1.2 billion in addition to the cash infusion.

By crystal clear on 1/17/2009 2:33:51 AM , Rating: 2
The cuts start from the top, as Executive Chairman and former President Hector Ruiz will see a 20 percent cut in his salary.

Too little ...Too late ... is the right summarization of this cost cuts that AMD intends to implement.

This should have been done one full year ago namely 1Q 07 or even earlier 4Q 06.

If it had been so,today AMD would have been in much better position today to tackle the recession that will stay on for quite a long time.

If & when you do see an economic recovery it will be only after 2H 10.

Now AMD needs to implement even more drastic solutions namely-

1) Hector Ruiz has to be FIRED immediately - his job titles & duties are NOT necessary & can be handled by the CEO namely Dirk Meyer.

This will mean an additional charge AMD has to take on to payout this HUGE compensation package or commonly refered as the "golden parachute".

This also will mean a HUGE COST CUT or savings,that will reflect on the AMD's balance sheet. making AMD cost efficient.

This will also enable or free up funds for additional R&D & other essential areas where employees can be retained & or spared of salary cuts of 10%.

2) Senior North American executives that are vice presidents or higher should get a 30 percent pay cut.

3) All employees NOT involved in manufacturing & R&D & or non essential staff, should be switched to a 4 day week programme instead of the 5 day week currently used.

Manufacturing & R&D should have an efficiency programs, such as working on Saturdays and longer shifts ,nstead of cutting employees.

The attitude in AMD should be-

"Work your way up or rust your way out."

A message for Dick Meyer-

"There is no better sign of a brave mind than a hard hand."

"Real communication is impossible without listening."

"Money never starts an idea; it is the idea that starts the money."

By crystal clear on 1/17/2009 5:34:41 AM , Rating: 2
The D.T

This below is the correct version of the story-

AMD, which trails Intel Corp (INTC.O) in the computer chip market, said the salary decreases range from 20 percent for its two top executive to 5 percent for lower level employees in North America and voluntary pay cuts in other regions.

As part of its cost cuts, it said Chairman Hector Ruiz and Chief Executive Dirk Meyer will temporarily take 20 percent salary cuts, while U.S. and Canadian executives at the level of vice president and higher will take 15 percent cuts.

North American employees who are not eligible for overtime pay will take 10 percent cuts, while overtime-eligible employees will see their pay reduced 5 percent. It is also implementing voluntary pay reduction measures for employees outside North America.

Compare the D.T. article & the above - you will see for yourself the difference.

The Reuters story is the correct version.

By Viditor on 1/17/2009 7:07:22 AM , Rating: 2
Ummm...I think it should be noted that Hector is leaving AMD very soon to head up the new Fab Co.

bad spelling?
By vadimur on 1/17/2009 8:38:53 AM , Rating: 2


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