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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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Fire Hector Ruiz
By WTurner on 4/18/2008 12:18:59 PM , Rating: 2
If the company is doing that badly and [b]1,600 people[/b] are going to lose their jobs then so should Hector Ruiz.

Hector Ruiz should be fired. It's obvious no one wants to work for the man. All his execs are quitting on him and now he is going to fire 10% of the workforce. Maybe he would like to see how it is to be thrown out on the street.

Fire Hector Ruiz.

RE: Fire Hector Ruiz
By rcc on 4/18/2008 12:35:38 PM , Rating: 3
lol, they probably can't afford to. The buyout on his golden parachute would make the cash situation even worse

RE: Fire Hector Ruiz
By Oregonian2 on 4/18/2008 3:31:11 PM , Rating: 3
It's more than that. He can't be fired until after the next set of huge employee cuts. Who'd want to come in knowing they'd have to lay off half of the employees right off? Need to have Hector be the hatchet man and let the replacement bask in the glory of an AMD that's not losing money.

Of course, looking at the by-division loss numbers (elsewhere), I expect they'll be dropping CPU's and just making graphics chips.... perhaps changing their name to ... uh... ATI?

RE: Fire Hector Ruiz
By cochy on 4/18/2008 12:48:46 PM , Rating: 4
It's true. The reason AMD is in the situation they are in today is as simple as it can get:

Bad management

It lead all the way to the top.

RE: Fire Hector Ruiz
By Sylar on 4/18/2008 2:04:53 PM , Rating: 3
They won't fire Ruiz, they'll "restructure" themselves by continually laying off employees until he's the last man standing. Yup

RE: Fire Hector Ruiz
By Elementalism on 4/18/2008 4:28:36 PM , Rating: 2
Like the Big Brother of microprocessor manufacturers.

RE: Fire Hector Ruiz
By spluurfg on 4/19/2008 3:42:53 PM , Rating: 2
Hector Ruiz should be fired. It's obvious no one wants to work for the man. All his execs are quitting on him and now he is going to fire 10% of the workforce. Maybe he would like to see how it is to be thrown out on the street.

I think part of the reason why its hard to find top talent in this case is because the industry is such a tough one -- tech is a harsh sector; you have to spend massive amounts on R&D and fabs frequently just to stay afloat, and products are constantly becoming commoditized, reducing margins. And unfortunately for AMD, their competition is just extremely strong. It'd take an extremely good manager to be able to turn any technology company into an industry leader, and if you're such a good manager, you can probably work for a company which is easier to make successful and possibly get paid more doing it.

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