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AMD takes an additional $70 million in restructuring charges

AMD and ATI have not enjoyed the success the two firms envisioned when AMD bought the graphics firm in 2006. AMD is hurting due to the global economy and announced this week that it will take an additional restructuring charge related to the $5.4 billion is spent to purchase ATI.

AMD says that it also laid off 100 more employees than it had originally announced bringing the total laid off over the quarter to 600.

As a result of the additional layoffs, AMD is recording $70 million in restructuring charges rather than the $50 million in charges it has expected. The chipmaker also says that the new cost reduction would result in additional charges though the first half of 2009, though the firm did not specify what the additional charges would be.

EWeek reports that AMD will take an additional goodwill impairment charge related to the ATI purchase from 2006. AMD says that the charge is based on an updated, long-term financial outlook. This isn’t the first impairment charge AMD has taken in relation to the ATI purchase, in June of 2006 AMD took a charge totaling $800 million. AMD will also take a $20 million impairment charge on an investment in flash maker Spansion.

AMD announced in early December that it was cutting revenue forecasts by 25%.



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This isnt good news...
By rudolphna on 12/30/2008 1:01:12 PM , Rating: 5
Well, for one thing, I want to disagree with the "ATi Mostly sucks" line. What? Really? I was under the impression that the current ATi line up is far superior to the NVIDIA lineup in both performance, AND value. GF GT280? yeah I can get the same performance from a 4870 for $200 or so, while being more energy efficient, cooler running, and much better Vista drivers.....

Also, some of you may or may not have heard about AMD building its Fab facility in Malta, New york. Well, I live literally, just up the road from where it is being built. Its about an 10 minute drive there from my house. Everyone here is very excited about the potential for the local economy and jobs. This would be a disiaster for the capital region. I skipped on the AMD processor, but at this point I refuse to buy anything other than AMD Graphics. Maybe things will turn around when AMD gets their 45nm chips out.




RE: This isnt good news...
By othercents on 12/30/2008 1:08:48 PM , Rating: 2
I think the biggest loss that ATI has is the laptop sector especially if people are recommending Intel C2D over the AMD counterpart. Most of the C2D machines use either Intel video or NVidia video. This was definitely a loss in revenue when AMD took over ATI which was the upgrade card for C2D laptops and desktops.

Other


RE: This isnt good news...
By FITCamaro on 12/30/2008 2:58:10 PM , Rating: 2
My laptop is a 2GHz Turion X2 with the 780G chipset. Way better than Intel graphics. But yes Intel's mobile C2Ds are much better. But the CPU does what I need.

Now with the new Nvidia laptop chipset out, Intel has a potential cheap integrated graphics chipset that doesn't completely suck like its chips do.


RE: This isnt good news...
By Inkjammer on 12/30/2008 2:59:40 PM , Rating: 2
Agreed on that. I'd never say that ATI sucks, but I don't think they turned out to be as profitable as AMD had hoped. Driving down the costs on the 4000 series was smart as it caused huge ripples for Nvidia, but it also hurt overall profitability on the ATI side. Then again, it did help ATI greatly increased adoption rate, so... maybe it'll pay off for them big down the line.

It's hard to say right now. I don't believe Phenom helped AMD at all. And while ATI increased their mobile precense with the Mobile 3870 Crossifre (featured in the Alienware M17) you never hear about them, which makes me question their performance.


RE: This isnt good news...
By taber on 12/31/2008 12:02:15 AM , Rating: 3
I agree that AMD's in a tough spot. I own a 4850, but haven't considered their processors since the C2D became mainstream. The only sweet spot for AMD seems to be the budget end, which means a smaller profit. Even on the extreme end of budget systems, Intel wins that with their Atom processor.

I don't see Intel getting caught by surprise by AMD again anytime soon. Hopefully AMD can find some niches to excel in again for processors. Their strong competition has helped spur the innovation and great prices the last several years.


RE: This isnt good news...
By 9nails on 12/31/2008 9:01:40 AM , Rating: 2
quote:
by othercents on December 30, 2008 at 1:08 PM I think the biggest loss that ATI has is the laptop sector especially if people are recommending Intel C2D over the AMD counterpart.


Lets not forget the Apple sector as well, in both desktop and notebook sales.

I believe the latest estimates were holding Apple's market segment at 10% of the world PC market, and 21% of the US market.

Unfortunately AMD has no avenue to compete in this arena.


RE: This isnt good news...
By theapparition on 12/31/2008 11:58:05 AM , Rating: 2
quote:
I believe the latest estimates were holding Apple's market segment at 10% of the world PC market, and 21% of the US market.

And you would be incorrect. Those numbers may be accurate for retail sales, but as a total sales market, Apple has less than 5% of PC sales.

It's amazing how statistics can change when just a single word clarifier is left out.


RE: This isnt good news...
By quiksilvr on 12/30/2008 2:24:19 PM , Rating: 1
Agreed. But at this point they should either do full focus on video cards or full focus on processors because its becoming quite clear that AMD can't handle both areas at once.


RE: This isnt good news...
By masher2 (blog) on 12/30/2008 3:23:30 PM , Rating: 1
> "Maybe things will turn around when AMD gets their 45nm chips out. "

I love to see competition against Intel as much as anyone, but its going to take more than a die shrink to put AMD CPUs operations back in the game. K10 wasn't nearly the boost it should have been, and its already getting a little long in the tooth.


RE: This isnt good news...
By FITCamaro on 12/30/2008 4:12:05 PM , Rating: 3
Some are saying the new 45nm chips offer the same overclockability as C2D. Given that Phenom isn't THAT much slower than C2D and Phenom's lower prices, this could help AMD. Put them back at the top, no. But definitely won't hurt.


RE: This isnt good news...
By theapparition on 12/31/2008 12:00:16 PM , Rating: 2
Problem is, even if you are right (which I don't agree with), Intel already has a new generation out.

AMD has NOTHING to compete with i7.


RE: This isnt good news...
By Amiga500 on 12/30/2008 4:18:08 PM , Rating: 3
K10.5 really does seem to be much better from all the preliminary stuff floating around the net. AMD have really improve the L3 latency which is making a BIG difference in many benches.

Sure, it can't go toe-to-toe with i7 at the high end, but it can give it a bloody nose at the low to mid range.

Especially considering platform costs.


RE: This isnt good news...
By FITCamaro on 12/30/2008 5:09:11 PM , Rating: 2
Yeah i7 looks really sweet but I'm just not going to spend that much for a motherboard and RAM. DDR3 is still expensive. I got 4GB of OCZ SLI DDR2-800 memory for $10 over the holidays. Same memory I've already got 4GB of.


RE: This isnt good news...
By 16nm on 12/30/2008 7:43:53 PM , Rating: 1
quote:
K10 wasn't nearly the boost it should have been...
What boost? If anything, I'd say K10 slowed rather than boosted. It certainly hurt earnings. As much as AMD didn't want a dog of a chip, K10 was a K9.


RE: This isnt good news...
By Operandi on 12/31/2008 12:09:10 AM , Rating: 2
K10 had the following problems.

1. It was too late.

2. It was built on too big of a process.

3. It couldn't scale fast enough to compete with C2D.

4. The initial revision suffered from design bugs.

Thats a lot to overcome but if half of those issues could have been avoided things would have been a bit different for the Phen. Some of it perhaps was to be expected such as the inferior manufacturing process and consequently the clock speed disadvantage, but the late introduction and the design bug really hurt AMD and should not have happened.


Reality 101
By Beenthere on 12/30/2008 1:14:27 PM , Rating: 1
Not sure who said ATI sucks but they have definitely dominated the graphics cards Biz in 2008 with the 4800 series cards. Nvidia is suppose to have some hotrodded parts for '09 but I wouldn't expect ATI to be sitting on their butts.

As far as CPU purchases go, few people need the fastest available CPU. Only people looking for bragging rights buy these over-priced CPUs. Keeping AMD alive and well is very important unless consumers want to be brutally exploited by Intel - again. Hopefully AMD will recover billions of dollars from Intel for some of the damages inflicted by Intel's illegal Biz practices.

The new Fab in Malta is likely to continue unless the economy falls into a full blow depression - and it might. The FOOLS in Congress just got the memo a few weeks ago that the U.S. economy has been in a recession for over 12 months. Seems like most people knew but not our "leaders" in Washington... When you get paid $170K a year for doing little and you only need to show up when you feel like it, I guess you're never in a recession like a normal citizen?




RE: Reality 101
By rdeegvainl on 12/30/2008 2:33:06 PM , Rating: 2
I will reward the company that makes the best product at the price I am willing to pay. I will not reward incompetence with my business. They want my money, they need to make a product that I want.


RE: Reality 101
By Beenthere on 12/30/2008 3:10:13 PM , Rating: 4
No one said to reward a company who doesn't make a product that you want. AMD is far from incompetent as Intel is about to see once again. If you want to buy Intel - the folks who tried to eliminate all competition from the marketplace by using illegal business practices for which they are now being prosecuted on three continents - go right ahead. I'm sure Intel would be glad to have a complete monopoly again. Then we can all buy Pentium 90 CPUs at $1000 a pop - like the Bad old days!

There isn't any typical PC user that needs a CPU more powerful or of better financial value than what AMD offers. Yes there are some "power users" who might run software that can take advantage or not of a faster clockspeed or CPU, but they are far and few between. Having a slighty faster frame rate in a video game is a joke for suckers and has zero actual value.

Bottom line, cutting off your nose to spite your face can be pretty painful long term. Buy what makes you happy but understand the consequences of your actions.


RE: Reality 101
By Oregonian2 on 12/30/2008 3:49:42 PM , Rating: 1
quote:
I'm sure Intel would be glad to have a complete monopoly again. Then we can all buy Pentium 90 CPUs at $1000 a pop - like the Bad old days!


Wouldn't work. Apple would go back to PPC's and everybody would go over to Apple boxes. Or to VIA CPU's, or perhaps Samsung versions. Or something left over from AMD's firesale.

After buying AMD exclusively over more than a decade, I've been buying Intel since Conroe. More bang for my buck (CPU + MB). Just replaced MB+processor in my home's backup server that had failed (old Athlon). New Intel based Asus P5KPL-CM MB w/integrated video and Gig-E (sufficient for server) and Intel Allendale dual core CPU (still overkill) was insanely cheap.


RE: Reality 101
By Bateluer on 12/30/2008 4:18:52 PM , Rating: 2
This didn't occur when Intel pretty much ruled the market. It was Intel, Cyrix, Centaur, AMD, IBM, and a few others. Everyone but Intel made the best CPUs, and charged extreme prices for them. People have short memories and don't remember the pre-K62 days. Heck, people don't seem to remember the pre Conroe era where AMD held superior CPUs between the P3 and P4 era.

Shoot, if AMD hadn't been around we'd just be getting Cedar Mill 65nm P4 chips now, and they'd be single core.


RE: Reality 101
By StevoLincolnite on 12/30/2008 10:36:13 PM , Rating: 2
It was never a clear-cut leader back in the older days, Cyrix was a great cheap processor, however it had stupidly bad floating point performance.

AMD's K6 was a great and cheap alternative to the Pentium 2 and early Pentium 3 Katmai's but it's Floating point wasn't up to Intel standards at the time.

Enter the K7 which completely pummeled Intel Pentium 3 Katmai, and Pentium 2's and fixed the floating point performance issues.

However the Athlon quickly lost ground when Intel introduced the Coppermine with it's on-die L2 cache giving it a massive advantage.

Then AMD decided to do add an On-Die L2 Cache to the Athlon around the 800mhz mark, which gave it a massive advantage over the coppermine.
At this point AMD and Intel were in an arms race to reach 1ghz.

The Duron wiped the floor with the Celeron, during this time there seemed to be a new processor released every week, and prices were dropping like flies.

Then Enter the Tualatin, a test chip if you will for a new die shrink which added a larger L2 cache and other goodies, It was very competitive to the Athlon at the time, and it gave the Celeron the needed juice to compete against the Duron.

Unfortunately the Tualatin was short lived and Intel launched the Willamette which was out-performed not only by it's older Tualatin and some of the Higher-end Coppermine chips but by the Duron and the Athlon as well, coupled with the expensive RDRAM and the Athlon was the shining night that everyone needed.

AMD pretty much remained on top, until Intel hit around the 2.8ghz area with the Northwoods, then the Athlons just didn't seem to scale all that well in-comparison to the Pentium 4.

Then AMD released a massive Hammer, the Athlon 64 which pummeled Intel and made AMD the leader in performance for many years.

So yes AMD had superior CPU's but that "Superiority" was never constant.

I remember the early Athlons and how people complained about the heat they produced... If only we knew what the Prescott would bring...


RE: Reality 101
By Oregonian2 on 12/30/2008 10:57:24 PM , Rating: 2
quote:
This didn't occur when Intel pretty much ruled the market.


It was suggested that Pentium 90's would be sold for a grand if AMD went away. Unlike in the olden Pentium 90 days, Apple didn't have the PPC processors available they do now to compete with, nor the associated prices. Such a Pentium 90 sale would NOT now be competing with what they Pentium 90 did in the old days -- it would compete with whatever the best that IBM makes now, and against current pricing made in current IBM production processes.

When was it when Intel charged 1000 times the price/performance ratio of alternative processors as was suggested (to which I responded)? If AMD goes away, Intel will still NOT be the ONLY CPU maker in the world. They would be in the catbird seat in the short term, but they could not abuse it in the way suggested because IBM still makes and uses PPC's, and many other processors (primarily for embedded use) are made by many other manufacturers.

For that matter the VIA CPU that's in some netbooks runs circles around a Pentium 90 and costs maybe ten bucks. That thousand dollar Intel Pentium 90 will outsell the VIA chip?

I don't think so, although whomever "dinged" my posting must think so.

If Intel charged a grand for a Pentium 90 *now*, and that were incorporated into all PC's (and presumably equivalent prices of maybe a hundred grand for what's now a top Intel processor) you don't think a Mac selling for one percent of the price with equivalent performance would start selling REALLY well? Did Apple products ever occur in the past where they had a hundred times the performance/price ratio (in real life, not in ads)? I don't think so.


Rumor
By microAmp on 12/30/2008 12:58:34 PM , Rating: 3
Rumor has it around here, AMD, that Jan. 29, 2009 is another layoff session.




RE: Rumor
By FaceMaster on 12/30/08, Rating: -1
RE: Rumor
By amanojaku on 12/30/2008 2:09:07 PM , Rating: 2
Don't forget to take your meds.


RE: Rumor
By Inkjammer on 12/30/2008 3:01:49 PM , Rating: 4
Intel mostly comes out at night. Mostly.


RE: Rumor
By porkpie on 12/30/2008 4:08:40 PM , Rating: 2
Why don't you put HER in charge?


I feel bad...
By amanojaku on 12/30/2008 2:03:16 PM , Rating: 4
Because I, and people like me, am partly to blame for this. I want 45nm AM3 processors and refuse to buy anything from AMD until the processors and motherboards are available. I'll compensate by buying a 4850.




RE: I feel bad...
By Omega215D on 12/30/2008 2:26:52 PM , Rating: 2
Get the 4870 1GB instead, it's pretty cheap and when you get your future processors there won't be much of a bottleneck. As stated on Anandtech, it's the card to get.

I did it the other way around getting a Quad Phenom paired with a EVGA GTX 260 Core 216 (it was on sale and reportedly runs GTA IV better). I stick with AMD processors due to the platform as a whole as being more upgrade friendly.


RE: I feel bad...
By 9nails on 12/31/2008 9:14:02 AM , Rating: 2
I'll share in that blame as well. But my justifications are driver and chipset based. I offer my ATI-based TV Tuner in my current rig as compensation. (And suffer through the driver issues, even still.) But my past experience with AMD based motherboards has shown that Windows (in general) finds more stability and compatibility on an Intel based chipset. I've enjoyed ATI video cards in the past, but credit Nvidia for working closer to Microsoft and likely the candidate to provide me a more stable driver.

It's not all about performance. Some of us want to get work done.


RE: I feel bad...
By saiga6360 on 12/31/2008 10:41:06 AM , Rating: 2
Buy 4 and you'll be just about even.


BK in 2009?
By phazers on 12/30/2008 3:07:00 PM , Rating: 3
During the last quarterly earnings conference, AMD said it hoped to achieve break-even this quarter (Q4). Instead, it looks like $450M lowered revenue, $200M less from the Abu Dhabi deal, $170M or so loss from the Lehman Bros. bankruptcy, and now another ATI writedown. When is the bad news gonna end for this company?

I'm starting to think Sharikook's "Intel BK by 2Q08" nonsense might actually come true, except for AMD. And I'm not the only one - from http://www.thestreet.com/story/10455447/2/amd-gets...

quote:
In his widely read "20 Surprises for 2009" published Monday, Doug Kass compiles a list of what he calls outliers, events that have a reasonable chance of occurring next year despite their long odds. Kass puts and AMD bankruptcy filing on his list, citing a general lagging of tech stocks in 2009 as capital spending by companies loses ground to maintenance expenditures.




More AMD tragedies
By crystal clear on 12/31/2008 9:26:03 AM , Rating: 3
Now read this-

On December 15, 2008, Advanced Micro Devices, Inc. (the “Company”), delivered a notice of termination to Lehman Brothers OTC Derivatives Inc. (“Lehman Derivatives”) of the capped call transaction that the Company entered into with Lehman Derivatives, represented by Lehman Brothers Inc. (“Lehman Brothers”) as its agent, in connection with the issuance by the Company of $2.2 billion aggregate principal amount of 6.00% Convertible Senior Notes due 2015 (the “Notes”) in April 2007.

The capped call transaction was intended to to reduce the potential common stock dilution to then existing stockholders of the Company upon conversion of the Notes by allowing the Company to receive shares of common stock from the counterparty generally equal to the number of shares of common stock issuable upon conversion of the Notes.
The filing by Lehman Brothers of a voluntary Chapter 11 bankruptcy petition in October 2008 constituted an “event of default” under the capped call arrangement, giving the Company the immediate right to terminate the transaction and entitling the Company to claim reimbursement for the loss incurred in terminating and closing out the transaction.
The Lehman Brothers bankruptcy proceedings are ongoing and the Company’s ability to reduce the potential dilution upon conversion of the Notes through the capped call transaction has effectively been eliminated.
The Company intends to claim reimbursement from Lehman Brothers for the loss of the value of the capped call transaction incurred in the termination and close out of the capped call transaction.

As a result of the uncertain recoverability of this counterparty exposure, the Company is unable to predict whether, and to what extent,it may be able to recover for this loss.

Moreover, as a result of the termination, the Company likely will be subject to potentially disadvantageous tax consequences, including the use of a material amount of its net operating losses against triggered taxable income.

http://secfilings.nyse.com/filing.php?doc=1&attach...

To put it simple language-

The deal was supposed to work like this: AMD paid Lehman Brothers $182 million to scoop up enough AMD shares before 2015, when the convertible senior notes come due, so that it could hand those shares back to AMD and cancel out the new shares that would flood the market when the senior notes were converted into shares of stock.



http://www.businessweek.com/ap/financialnews/D9564...

To summarize it-

The money AMD paid to Lehman is for all practical purposes lost & unrecoverable.

To prevent share dillution AMD has to buy back its own share & has NO money to buy them back.




6 core 45nm athlons :)
By Soulkeeper on 12/31/2008 1:58:56 AM , Rating: 2
i7 doesn't appeal to me at all.
i'd take 6 real cores over 8 logical HT things anyday
reminds me of the P4 vs. athlon64




Trust Fund ?
By suzuki2 on 12/31/2008 6:56:19 AM , Rating: 2
Someone should get a trust fund for donations to help AMD. If they go under Intel and Nvidia are going to wack their prices way up because of no competition! It doesn't matter if you like AMD or not if we could help in any way this would benefit all who are in the pc market. Intel tried doing this with the Rambus memory and the ridiculous prices they wanted to charge and if given the chance again they will do it. If everyone could put up 5, 10, 20, would make a big difference and that is not much to put out one time to help a company that would benefit us all in the long run!!!!




WRONG
By Ammohunt on 12/30/08, Rating: -1
RE: WRONG
By ebakke on 12/30/2008 2:22:51 PM , Rating: 5
Do you honestly have a use for the 4th?


RE: WRONG
By StoveMeister on 12/30/2008 3:00:30 PM , Rating: 3
Crappy? I don't think so. Mid-range (which is where the majority of sales are) Intel and AMD are pretty even (see Anand's low-mid range PC systems review). High end belongs to Intel at present, but hey, who (except hard core technophiles and FPS-happy gamers) buys bleeding edge?
IMO a lot of this is AMD still working through staffing and economy issues post spinning off their fabs, and still some (as reported) issues post-merger.
The line about cutting revenue forecasts, now that's due to the economy.
PS- while I don't own a triple-core, I'd really like one. To my mind at present (and for the next year or two) it makes way more sense than quad or more. 99% of the software we use regularly has truble with two cores fer crissake


RE: WRONG
By just4U on 12/31/2008 10:57:59 AM , Rating: 2
I own a PhenomX3 and Core2Quad based system and they are comparable at stock speeds. People would be hard pressed to notice a difference at all. The 8650 is priced in and around the C2D 7700 so it's a decent deal.


RE: WRONG
By amanojaku on 12/30/2008 4:51:42 PM , Rating: 2
I think the triple core CPU was one of the most brilliant moves by AMD. They are really defective quad cores. One of the cores is bad, which is common in manufacturing, so AMD has a choice of scrapping the CPUs (waste of money, time, materials, power, man power, etc...) or selling them as a different product. I think AMD is smart to take in any money it can to offset the costs, and maybe even make a profit, too.

Kind of like selling crap as manure.


RE: WRONG
By Darkk on 12/31/2008 1:18:37 AM , Rating: 2
Kinda like what Intel did years ago with the 486 processors for the DX and SX line. SX is exactly the same as the DX with the exception the math co-processor been disabled due to defect found during manufacturing.

Intel made a nice profit from the SX line.


RE: WRONG
By Chocobollz on 1/1/2009 10:18:22 PM , Rating: 2
Yeah, disabling several parts within the CPU is a normal manufacturer's practice so there's no need to be a big fuss over that matter. Even the Pentium Dual Core sold by Intel (like my Pentium Dual Core T2330) is a Merom core which have a defective L2 cache.


"Vista runs on Atom ... It's just no one uses it". -- Intel CEO Paul Otellini

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