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.
