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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 Operandi on 4/18/2008 11:42:01 AM , Rating: 2
I would a agree that its largely their own fault for the situation they are in.

I do disagree though about their products being completely inferior however. When overclocked Phenom has been shown to scale better clock for clock than Core2 in certain situations. Of course it needs more voltage and more cooling but thats still underlying potential there.

To turn things around AMD needs to get 45nm out and clock speeds up and stop missing projected launch dates.

RE: No Sympathy Whatsoever..
By defter on 4/18/2008 1:07:14 PM , Rating: 1
When overclocked Phenom has been shown to scale better clock for clock than Core2 in certain situations.

Thank you for most creative metric for a long time. AMD fans must be desperate, they can't use:
- performance
- performance/watt
- performance/clock
- clock/watt
- overclocking capability
or any other similar metrics, since Intel has a clear lead in those.

Luckily there is "better scalibity clock for clock when overclocked" metric left :)

RE: No Sympathy Whatsoever..
By eye smite on 4/18/2008 1:30:40 PM , Rating: 5
Umm, I'll give you a different metric to look at. Under intense load such as MySQL or grid computing even the older K8 architecture holds it own right there with intel and in some cases surpasses it. You can quivel over benchmarks all you want, but a few seconds difference in benchmarks with the C2 beating the athlonX2 or the phenomX4 is not impressive to me, and certainly doesn't warrant all the bragging that intel fanboys throw out there. In reality, it doesn't matter whether you have AMD or Intel, if the cpu does what you want it to in a time manner condusive to your projects or work, what does it matter? So really what we're talking about is preference more than anything, and if AMD sells their chips at a lower price point than intel, Joe Average walking into circuit city will buy one cause it's the right price. This whole Ford vs Chevy argument is completely a moot point on which one is better.

RE: No Sympathy Whatsoever..
By Master Kenobi on 4/18/2008 1:43:25 PM , Rating: 1
MySQL servers generally don't scale well enough to warrant the type of hardware typically found in the server arena. In either case, processing power is the least of your problems. Usually RAM, and Disk Access time are on the top of the bottleneck list.

RE: No Sympathy Whatsoever..
By defter on 4/18/2008 2:28:19 PM , Rating: 2
Previous poster was talking about Phenom, so we need to look at desktop, not server performance.

So really what we're talking about is preference more than anything, and if AMD sells their chips at a lower price point than intel, Joe Average walking into circuit city will buy one cause it's the right price.

And you can see the consequence of selling slow chips at low prices in the title of Dailytech's news post...

A company cannot survice by contentrating on low-end products alone, just look at VIA.

RE: No Sympathy Whatsoever..
By fxyefx on 4/18/2008 1:44:47 PM , Rating: 2
I think of AMD as having more of a niche role in the semiconductor industry. They're kind of like the x86 flavor of the market that IBM's POWER chips occupy. All these losses they've been racking up I attribute to their mistake of aspiring to be a significant competitor against Intel on desktops and laptops. Their chips are very well designed – for certain server applications and high-performance computing. They aren't well designed for what desktop and laptop users need compared to what Intel has been able to achieve with Core 2. AMD needs to throw away its delusions that it can fight Intel fairly in its own territory. Their chips can and do command much better margins in their Opteron flavors. Instead, they're wasting tons of their production capacity on desktop and laptop chips that end up being relegated to the budget price range, and AMD's financials have been atrocious as a result.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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