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AMD announces plans to toss out its dead weight.

The news coming out of AMD hasn't been on the most positive note in the past few weeks. The company announced in early April that it will cut 1,600 jobs by the end of 2008 representing 10% of its workforce. The reason for the cuts came as a result of steep declines in every business arena that AMD competes.

Four days later, the company's Chief Technology Officer, Phil Hester, stepped down from the company with no replacement in sight.

Today, AMD released even more unsettling news in the form of its Q1 2008 earnings report. As previously forecasted by AMD, revenue fell 15% from the previous quarter to $1.505B and the company experienced a net loss of $358M. Operating losses totaled $264M and the company faced a charge of $50M due to its 2006 acquisition of ATI.

"A seasonally weak first quarter was amplified by a challenging economic environment for consumers and lower than expected revenues of previous generation products, resulting in lower than expected revenues in all business segments," said AMD CFO Robert J. Rivet. "However, we are encouraged by the market acceptance of our Quad-Core AMD Opteron server processors as well as our new chipset and graphics offerings."

After experiencing an entire year of losses, AMD is now looking to restructure its business. The company will now put all of its divisions under the microscope and make the decision to sell off some of its underperforming units in order to become profitable in the second half of 2008.

"It is clear that our business environment has changed from just the second half of last year when we saw some of our non-core businesses on a path to growth and profitability. That is now questionable," said AMD CEO Hector Ruiz.

"As a result, we are embarking on a significant restructuring of our company to address the following: We need to intensely scrutinize all of our businesses in order to ensure that our core x86 and graphics products are on a healthy path to leadership and profitability," Ruiz continued. "We also need to scrutinize our non-core business and see how they fit into our plans toward growth and profitability."

AMD's consumer electronics division could be a prime target for cuts according to Technology Business Research analyst John Spooner. "It makes sense because it's not a core part of their business, and they can’t really afford to focus on consumer electronics at this point," said Spooner. They need to focus on processors for PCs and servers as well as graphics."

AMD is indeed ramping up to unleash a new wave of processors and graphics cards for consumers. As reported yesterday DailyTech, AMD is working on its quad-core 45nm Shanghai processor architecture along with its 6-core and 12-core variants.

On the graphics front, AMD is preparing for the launch of its successor to the Radeon 3850/3870 graphics processors. Radeon graphics processors based on the new RV770 core are expected to debut under the $300 price point.

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RE: No Sympathy Whatsoever..
By 67STANG on 4/18/2008 11:06:18 AM , Rating: 2
I agree. I would also state though, that when AMD was on their K6 line of processors, they were inferior as well-- but they were the "budget processor" back then. It's when they startled Intel by besting their P4 that they awoke "a sleeping giant". IMHO, they could only hold the performance crown for so long.

I believe it will be years before they "pwn" Intel, they way Intel is besting them right now. But just like a lot of tech competitors, it's a back and forth dominance race.. Same goes for ATI vs. NVIDIA. ATI held the crown for a while, now NVIDIA does. That's the way of things.

Unfortunately for AMD, their purchase of ATI couldn't have been at a worse time and is one of the largest reasons for their struggling at the moment. They simply don't have enough capital to take on ATI's debt and spend the assloads of money it takes to make the most advanced processors.

It will indeed be a while before they do well in anything except the server market.

RE: No Sympathy Whatsoever..
By amanojaku on 4/18/2008 11:16:57 AM , Rating: 2
They simply don't have enough capital to take on ATI's debt and spend the assloads of money it takes to make the most advanced processors.

If I was a retailer and my client offered me payment in assloads... I dunno, I'd ask for a check or credit card.

Great post, btw!

RE: No Sympathy Whatsoever..
By KernD on 4/19/2008 11:16:16 PM , Rating: 1
ATI held the crown for a while

That should read as, "for a very short while", what was it, one year? When Ati had it's 9700/9800 against the lowly 5800FX.

RE: No Sympathy Whatsoever..
By Spoelie on 4/21/2008 5:27:09 AM , Rating: 3
9700pro (12/2002) up till the release of the 6800 (04/2004) was more than a year.

R420 series held up pretty well to NV40, it all depended on the game you were running.

7800 took the crown for the smaller part of a year, but x1900 series took it back for 11 months (january till november, release of 8800)

I would say it has been going back and forth quite regularly

“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads

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