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AMD announces the job cuts after a brutal Q1 earnings announcement

After confirming it had to reduce expenses, AMD recently announced that it will cut 430 jobs worldwide, which is 2.6% of its workforce.  Around 40 jobs will be cut in AMD's Sunnyvale and Santa Clara, CA offices; 80 jobs in Austin, TX; around 12 in Boston, MA; and 50 in Markham, Ontario.  No workers in Dresden, Germany, location of AMD chip-making facilities, will be laid off. 

The remainder of the job cuts will be spread throughout AMD offices and manufacturing locations around the world.  Most of the jobs will be from marketing, sales and administration, but several engineering jobs will also be cut.

The announcement comes after AMD Chief Executive Hector Ruiz described AMD's recent performance as "unacceptable."  Ruiz said that as many as 800 jobs, the equivalent of 5% of AMD's workforce, would face possible elimination.

"There is no way to sugarcoat our performance in the first quarter," after the company posted a $611 million loss, said Ruiz.

Industry analysts are unsure if AMD will have to cut more jobs in the near future.  "I'm surprised the number is as small as what it is," said Brian Piccioni, a BMO Capital Markets analyst.

American Technology Research analyst Doug Freedman believes the job cuts could "save the company about $40 million per annum in operating expenses and add 8 cents to the bottom-line."

AMD recently detailed its desktop plans for the next year, which the company hopes will help it regain footing in the CPU market.  It recently unveiled Agena FX, a quad-core desktop CPU, and plans on unveiling Phenom FX next week. 

The company remains engaged in a brutal price cut war with Intel.  Intel slashed prices on the Core 2-family late last month, with deeper price cuts expected this summer.  In addition, Intel was able to neutralize an entire year of AMD marketshare gains in one quarter.

While Intel released the Core 2 Duo chip last year, AMD believes its Barcelona technology will offer better performance since it has four cores on a single die.

Intel recently also announced that it will cut another 1,000 employees at a plant where some employees worked on  200mm silicon wafers.

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Core 2 + the ATI purchase
By hellokeith on 5/11/2007 5:18:40 PM , Rating: 2
It looks as if AMD is suffering on both fronts. Its revenues are down because of Intel Core 2. And its expenses are up because of the ATI merger.

I think AMD has more nimble, creative people in the engineering/development areas compared to their much smarter Intel designer counterparts.

And I think AMD has a good long term strategy. But the question is can they survive the short term to make it to the long term?

Perhaps AMD should accept, at least for an interim period, its previous position as a value hardware provider. It took AMD some time to take the performance lead away from Intel. Prior to that, AMD hardware was not faster or better than Intel, but it was much cheaper. And that helped them build a base. To make it through this rough time, they should again look to that value-conscious base.

RE: Core 2 + the ATI purchase
By Mitch101 on 5/11/2007 5:29:43 PM , Rating: 2
I think what they did wont yield any quick returns but in the long run its the right decision when you look at the big picture. Read ANANDTECH's article.

Also any time there is a merger there is duplicate positions that should be eliminated. Sometimes it takes a little while to determine where to make cuts.

Core 2 did put a dent in AMD's plans but I expect them to bounce back into the game.

If all works well AMD will reduce existing inventory as much as possible while stockpiling K10 and have enough to supply the channel for the BACK TO SCHOOL LAUNCH. Thats the most profitable time of year and I suspect thats AMD goal to have all thier ducks in a row for a massive assualt on Intel since we pretty much know a K10 at 2.5ghz beats a Conroe and should beat Penryn in NON SSE4 benchmarks. Also the rumors of AMD having 2.9-3.1ghz chips on the respin of silicon. This might be AMD's biggest launch ever they need to get it right even if everyone today wants to see benchmarks.

RE: Core 2 + the ATI purchase
By darkpaw on 5/11/2007 5:47:32 PM , Rating: 2
There won't be any K10s for the back to school period. The other article that was just posted today said they are shooting for Christmas.

RE: Core 2 + the ATI purchase
By RW on 5/11/2007 9:50:45 PM , Rating: 2
The latest news is that K10 does have SSE4A read more on:

So it should be competitive even on SSE4 benchmarks.

RE: Core 2 + the ATI purchase
By defter on 5/12/2007 5:41:56 AM , Rating: 2
??? Why would it? Barcelona doesn't support SSE4.1 or SSE4.2.

RE: Core 2 + the ATI purchase
By Amiga500 on 5/12/2007 12:03:29 PM , Rating: 2

From this it appears to support SSE4a.

This has differences from SSE4.1 and SSE4.2 which intel are going to introduce. What the differences are I am not sure.

RE: Core 2 + the ATI purchase
By defter on 5/12/2007 1:38:37 PM , Rating: 2
The difference is huge. Your link showed that SSE4a includes only 4 new instructions: "MOVNTSS, MOVNTSD, EXTRQ, INSERTQ".

Intel's SSE4.1 includes 47 instructions and SSE4.2 includes 7 additional instructions.

Thus SSE4a will not make much difference in media encoding.

RE: Core 2 + the ATI purchase
By jpeyton on 5/11/2007 5:32:45 PM , Rating: 4
AMD can't beat Intel at anything, it seems.

Cutting 400+ jobs is a paltry number compared to Intel's planned job cuts of 11,500.

RE: Core 2 + the ATI purchase
By TrogdorJW on 5/11/2007 5:52:35 PM , Rating: 3
Cut jobs by large corporations happen all the time. Then they bring people back in as consultants, or they hire new people elsewhere after a new location is completed. It sucks to lose your job, but that's one of the joys of working for a corporation.

RE: Core 2 + the ATI purchase
By sdsdv10 on 5/11/2007 6:21:36 PM , Rating: 2
It sucks to lose your job, but that's one of the joys of working for a corporation.

I didn't know only people who worked for corporations lost their jobs. I be sure to avoid them next time and have a job for life! ;-)

RE: Core 2 + the ATI purchase
By Dactyl on 5/11/2007 7:04:03 PM , Rating: 5
I only buy all-natural, shade grown CPUs from indigenous silicon farmers. My conscience is clear.

RE: Core 2 + the ATI purchase
By hlper on 5/11/2007 5:45:35 PM , Rating: 2
The problem with AMD trying to reclaim the value title is that Intel has already anticipated that move. You can already buy a value priced E4300 for barely over $100, and prices are going down.So, I don't see how AMD could make money on a more inexpensive product.

I think AMD's best plan is the one they have right now, which is to produce a product that is unique and able to beat Intel processor technology (at least in some applications). AMD won market share from previous Intel buyers by performing very well in the gaming segment, and they need to appeal to a group of enthusiast users in that way again.

RE: Core 2 + the ATI purchase
By Hydrofirex on 5/11/2007 6:05:47 PM , Rating: 5
Prior to that, AMD hardware was not faster or better than Intel, but it was much cheaper.

What you're proposing sounds good in theory, but if you think about what's going on you'd realize that this is exactly why this pricing war is so brutal on AMD. They are trying to reprice down to the lower end of the market to stay competitive, and Intel just keeps cutting their prices for equipment that is pretty much superior on every front. Moral of the story: Intel is pricing such that they are squeezing AMD even at the value end of the market. Which is why AMD is in it's current situation. Intel must have learned in the last round that if it lets a sleeping dog alone it will get bitten....


RE: Core 2 + the ATI purchase
By Bonesdad on 5/12/2007 2:31:02 PM , Rating: 2
WHich says to me that Intel products have a huge profit margin, on a per CPU basis. They would not continue to cut prices if it was costing them $$ to produce the CPUs

RE: Core 2 + the ATI purchase
By Russell on 5/11/2007 8:48:58 PM , Rating: 2
Another problem with returning to the value end is that it's more difficult these days to pay for the constant process technology and fab development that these companies require. Both the R&D and equipment are much, much more expensive than they were a decade ago. I don't believe a CPU vendor selling only low-end CPU's could finance these facilities without using out-of-date technology. Of course, if your technology is out-of-date, good luck catching up.

Intel eliminates 11,500 jobs and closes Fabs
By cornfedone on 5/12/2007 11:29:49 AM , Rating: 2
This real story is Intel is losing market share, eliminating tens of thousands of jobs and closing Fabs because AMD continues to gain market share with better products and service. Yes, AMD has suffered from a price war as Intel has and yes AMD has lost some sales due to Intel rushing some Hail Mary products to market, but AMD is once again gonna punish Intel with the K10 series.

Instead of closing Fabs like Intel, AMD is building Fabs because demand for their products is increasing despite a couple quarters blip in sales. ATI's new products are also positioned to gain market share. All M&As take some time to start hitting on all cylinders and that's about to happen for AMD. Intel already knows it's up the creek and that is why they have been trying to buy every sale they can get now before Barcelona. Intel knows once the K10 iterations are released, Intel is in deep shitze and will need to resort to media hype and fire sale pricing to sell their non competitive products.

RE: Intel eliminates 11,500 jobs and closes Fabs
By hellokeith on 5/12/2007 1:30:34 PM , Rating: 2
Are you living under a rock?

Intel took back retail dominance in only 2-3 quarters. Demand isn't high for AMD hardware, in any way you want to compare it. The only slightly favorable area AMD has left is MP Server market, which is high cost/low profit, and everyone already sees this market shifting back as we speak to Intel with their Core 2 Xeons, quad-core MP, etc.

Go back to your viral market hole and enjoy your FUD shil money.

By ninjit on 5/12/2007 6:06:18 PM , Rating: 5
wtf is wrong with you?
Do you have capitalization-Tourettes or something?

That has to be one of the worst posts I've ever had the pain of reading.

By herbiehancock on 5/13/2007 8:40:03 AM , Rating: 1
I just wonder who the heck pays cornfedhole to spew that trash!

True, Intel closed some Fabs.......and is opening new ones at the same time. Interestingly, they closed the oldest tech ones....nothing producing current tech, like C2D cpus.

I still have yet to see cornhole produce a single link to any legit sites that show Intel losing market share right now to AMD....and that's because he cannot.

The C2D cpus are a ""Hail Mary"???? I suppose if you live in an insane, not-from-anyone-else's reality...but in this world, the C2D is anything but a Hail Mary was and is a very good step forward for Intel in cpu design.

And when AMD finally gets Barcelona to market, Intel will have its NEXT gen processors about to debut.

But I love how cornholio contradicts himself throughout his FUD posting.......first says Intel is losing market share right now, and then does a 180 and says AMD has had a couple of quarters downturn in sales.

So which is it? AMD gaining market share or AMD having, as you put it, a 2 quarter (and that's 6 months...half a year!) of depressed sales? Can't have both simultaneously, boyo.

So, keep fronting and shilling for AMD.....everyone sees right through you, cornanushole, for what you PAID AMD SHILL.

Good luck and good night.

How about cutting Hector's compensation....
By kamel5547 on 5/11/2007 7:02:16 PM , Rating: 2
Knock some of that 10-13 million off (a bit of a range depending on who reports it, I've seen even higher than this) and maybe you could keep those engineers. Oh thats right... performance has been unaccpetable but it isn't managements fault.

RE: How about cutting Hector's compensation....
By Phynaz on 5/14/2007 11:11:41 AM , Rating: 2
AMD - "Another Month Delay"

By crystal clear on 5/15/2007 1:05:48 AM , Rating: 2
Thats interesting !

By defter on 5/12/2007 5:45:48 AM , Rating: 2
Hector actually had higher earnings that Intel's CEO last year:

By lowering compensations for executives to the level they deserve (i.e. $1/year), AMD could save dozens of millions.

By crystal clear on 5/12/07, Rating: 0
By KernD on 5/12/2007 12:52:08 PM , Rating: 2
Around 1975 AMD introduced a reverse-engineered clone of the Intel 8080 microprocessor. Thats exactly what they should done with Intel Core & core 2 as a Short Term Stratergy & Barcelona/Torenza for the long term.

With todays processor complexity it's not possible to reverse engineer a processor in a reasonable time frame. Thats exactly why they stopped doing that, it would have made them lag behind more and more. And I doubt you would get the same performance anyway.

If AMD would have further developed/refined the above technology,then ofcourse it would have been in a better position to match Intels production & prices.

How do you know that they haven't improved on there tech?
Just think about it, they must have, they invest in improving there fab just like every other company, it's just that Intel can invest much more in that...

Its only now they have started to discuss the ASSET LIGHT !

Were you aware that back last year they had supply problems and had some chips produced at one of the 2 big Taiwan foundry company?

And by the way they could never compete with Intel being a Fab less company. How could giving part of the revenu to an other company to have them build fabs and do research improve there situation? They have a deal with IBM, they pool research money, thats a great deal. And they use 100% of the capacity of the fabs they have anyway. Companies like TSMC are good for companies that make less chips and don't need huge production capacities or can't afford research, and are competing with other fab less companies... like NVidia, well they are now competing with ATI that will eventually have fabs... well see how that works out.

By crystal clear on 5/13/2007 1:40:09 AM , Rating: 1
Here is some more speculation of Asset lite

AMD: asset-lite coming!

It looks like AMD has learned some things from the ATI acquisition in the form of using major foundries. Hector actually stated that in the conference call!

The difference here compared to the recent move by Texas Instruments is that leading-edge production will remain in-house at Fab 36 and later at Fab 38. Trailing-edge MPUs, which are a big part of the market and especially the ‘channel,' look like perfect products for shipping out to foundries.

This could give some great flexibility to AMD, who could hint that not only will they use Chartered Semiconductor more for 90nm devices, but that they could also use IBM's Building 323!

The fact that Fab36 is fully converted to 65nm and is not being affected by the $500 million capex cut means that we can expect continued ramp of dual- and quad-core for the rest of the year. This is important as this area is the server market honey pot.

The sacrifice being made is Fab 30. Basically, the rate of pace of the 200mm to 300mm conversion at the Dresden fab will slow, though it might be more likely that the pace will stop completely!

By KernD on 5/13/2007 9:10:32 AM , Rating: 2
This article seems to say that they will used Chartered to augment production, just like they did before, if the demand is greater than there production capacity. So asset-lite is just adding this to there own production. Building more fabs simply can't be done with the budged they have right now, they won't go fab-less.

They just can't afford to work like Intel and have enough fab and do a rotation of which fab has the most advanced process.
Maybe one day... but not today.

Speculation :X
By Puddleglum1 on 5/11/2007 5:38:58 PM , Rating: 3
People who buy computers I build think I'm a magician. Likewise, I have no idea how all the gates and transistors in CPU's are constantly and almost proportionately increased and improvised year after year. My Assembly Language class helped me understand the basic principles, but as for how two companies can compete neck and neck using separate engineers and even design methodologies, it's in the least a marvel to see year after year how competing products perform so closely.

Obviously that's just an emotional reaction, because there's a rhyme and reason behind all this, but I'm simply not in the know.

However, what I do know is that AMD's desktop CPU's sold last quarter (and quarter before that) are still lacking behind Conroe and Allendale. The price cut was last quarter and quarter before that. Those two combined makes me think that last quarter is going to be the first wake before the real wave of their poor earnings hit.

RE: Speculation :X
By crystal clear on 5/12/2007 1:03:52 AM , Rating: 1
Those two combined makes me think that last quarter is going to be the first wake before the real wave of their poor earnings hit.

Yes you are right & predict correctly.
Its a well known fact that 2007 is a year of losses all the way through 1Q 2008.

Instead of concentrating on profits they AMD will be preoocupied with loss reduction & damage control. Its like your area is about to be hit by a CYCLONE/HURRICANE-
you know it will wipeout anything/everything in its path.
Your prime objective is to survive & limit damage to property.

Obviously that's just an emotional reaction, because there's a rhyme and reason behind all this, but I'm simply not in the know.

You are cetainly very honest with yourself & on this site.
You speak your thoughts which are very down to earth.
I admire this quality in you.
Your title "Speculation :X" is very good indeed.

(Agena) != (Phenom) ?
By Le Québécois on 5/12/2007 1:41:26 AM , Rating: 2
AMD [...] recently unveiled Agena FX, a quad-core desktop CPU, and plans on unveiling Phenom FX next week.

I thought Agena was the codename of the first cpu to receive the brand name Phenom. If not, what's the difference between the two?

RE: (Agena) != (Phenom) ?
By KristopherKubicki on 5/13/2007 5:21:57 AM , Rating: 2
Phenom is the brand name, Agena is just the processor code name.

Sad it had to happen
By ira176 on 5/13/2007 12:23:00 AM , Rating: 2
but it seems as though with the merger, they couldn't escape cutting some jobs, perhaps some duplicate jobs between ATI and AMD. Hopefully AMD can become more streamlined and productive and competative.

RE: Sad it had to happen
By redbone75 on 5/13/2007 2:20:39 AM , Rating: 2
Rarely does a merger between two large companies happen that isn't followed by some restructuring, which often occurs in the form of job cuts or reassignments. It's a natural thing, so please, people, stop putting everything on the whole lack of competitiveness to the Core 2 Duo. If history has anything to say about it, we'll see AMD bounce back with a competitive/superior product soon and then Intel will take a step back, and then the whole cycle will repeat itself.

By MrDiSante on 5/11/2007 9:26:03 PM , Rating: 2
I'm pretty sure you meant 2.6% of their workforce, not just 2.6.

do 400 jobs make a difference?
By Gul Westfale on 5/13/2007 5:30:15 PM , Rating: 2
in the face of such massive losses does the money they save by laying off 400 people really make a difference?

they will be losing whatever work these 400 were doing, and that may not be so good...

it's sad to see that it is usually management that gets a company in trouble, and the workers have to pay the price...

By tygrus on 5/13/2007 11:00:35 PM , Rating: 2
AMD didn't make as much as they could have when they had the advantage over Intel. Cutting R@D and slowing progress several years ago limited potential and put them behind when Intel came back with vengeance. Dell threw a spanner in the works just when AMD had plenty of channel demand and Intel was only just starting C2D.

It's been almost 10 months since Intel C2D products making the most of 65nm. We are still waiting for a major product update from AMD to promote the brand and grab mind share. In the mean time AMD keeps loosing money. The only way I see AMD surviving is if they spend their money wisely to release better products earlier and encourage people to but AMD.

"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov

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