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AMD takes an additional $70 million in restructuring charges

AMD and ATI have not enjoyed the success the two firms envisioned when AMD bought the graphics firm in 2006. AMD is hurting due to the global economy and announced this week that it will take an additional restructuring charge related to the $5.4 billion is spent to purchase ATI.

AMD says that it also laid off 100 more employees than it had originally announced bringing the total laid off over the quarter to 600.

As a result of the additional layoffs, AMD is recording $70 million in restructuring charges rather than the $50 million in charges it has expected. The chipmaker also says that the new cost reduction would result in additional charges though the first half of 2009, though the firm did not specify what the additional charges would be.

EWeek reports that AMD will take an additional goodwill impairment charge related to the ATI purchase from 2006. AMD says that the charge is based on an updated, long-term financial outlook. This isn’t the first impairment charge AMD has taken in relation to the ATI purchase, in June of 2006 AMD took a charge totaling $800 million. AMD will also take a $20 million impairment charge on an investment in flash maker Spansion.

AMD announced in early December that it was cutting revenue forecasts by 25%.



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This isnt good news...
By rudolphna on 12/30/2008 1:01:12 PM , Rating: 5
Well, for one thing, I want to disagree with the "ATi Mostly sucks" line. What? Really? I was under the impression that the current ATi line up is far superior to the NVIDIA lineup in both performance, AND value. GF GT280? yeah I can get the same performance from a 4870 for $200 or so, while being more energy efficient, cooler running, and much better Vista drivers.....

Also, some of you may or may not have heard about AMD building its Fab facility in Malta, New york. Well, I live literally, just up the road from where it is being built. Its about an 10 minute drive there from my house. Everyone here is very excited about the potential for the local economy and jobs. This would be a disiaster for the capital region. I skipped on the AMD processor, but at this point I refuse to buy anything other than AMD Graphics. Maybe things will turn around when AMD gets their 45nm chips out.




RE: This isnt good news...
By othercents on 12/30/2008 1:08:48 PM , Rating: 2
I think the biggest loss that ATI has is the laptop sector especially if people are recommending Intel C2D over the AMD counterpart. Most of the C2D machines use either Intel video or NVidia video. This was definitely a loss in revenue when AMD took over ATI which was the upgrade card for C2D laptops and desktops.

Other


RE: This isnt good news...
By FITCamaro on 12/30/2008 2:58:10 PM , Rating: 2
My laptop is a 2GHz Turion X2 with the 780G chipset. Way better than Intel graphics. But yes Intel's mobile C2Ds are much better. But the CPU does what I need.

Now with the new Nvidia laptop chipset out, Intel has a potential cheap integrated graphics chipset that doesn't completely suck like its chips do.


RE: This isnt good news...
By Inkjammer on 12/30/2008 2:59:40 PM , Rating: 2
Agreed on that. I'd never say that ATI sucks, but I don't think they turned out to be as profitable as AMD had hoped. Driving down the costs on the 4000 series was smart as it caused huge ripples for Nvidia, but it also hurt overall profitability on the ATI side. Then again, it did help ATI greatly increased adoption rate, so... maybe it'll pay off for them big down the line.

It's hard to say right now. I don't believe Phenom helped AMD at all. And while ATI increased their mobile precense with the Mobile 3870 Crossifre (featured in the Alienware M17) you never hear about them, which makes me question their performance.


RE: This isnt good news...
By taber on 12/31/2008 12:02:15 AM , Rating: 3
I agree that AMD's in a tough spot. I own a 4850, but haven't considered their processors since the C2D became mainstream. The only sweet spot for AMD seems to be the budget end, which means a smaller profit. Even on the extreme end of budget systems, Intel wins that with their Atom processor.

I don't see Intel getting caught by surprise by AMD again anytime soon. Hopefully AMD can find some niches to excel in again for processors. Their strong competition has helped spur the innovation and great prices the last several years.


RE: This isnt good news...
By 9nails on 12/31/2008 9:01:40 AM , Rating: 2
quote:
by othercents on December 30, 2008 at 1:08 PM I think the biggest loss that ATI has is the laptop sector especially if people are recommending Intel C2D over the AMD counterpart.


Lets not forget the Apple sector as well, in both desktop and notebook sales.

I believe the latest estimates were holding Apple's market segment at 10% of the world PC market, and 21% of the US market.

Unfortunately AMD has no avenue to compete in this arena.


RE: This isnt good news...
By theapparition on 12/31/2008 11:58:05 AM , Rating: 2
quote:
I believe the latest estimates were holding Apple's market segment at 10% of the world PC market, and 21% of the US market.

And you would be incorrect. Those numbers may be accurate for retail sales, but as a total sales market, Apple has less than 5% of PC sales.

It's amazing how statistics can change when just a single word clarifier is left out.


RE: This isnt good news...
By quiksilvr on 12/30/2008 2:24:19 PM , Rating: 1
Agreed. But at this point they should either do full focus on video cards or full focus on processors because its becoming quite clear that AMD can't handle both areas at once.


RE: This isnt good news...
By masher2 (blog) on 12/30/2008 3:23:30 PM , Rating: 1
> "Maybe things will turn around when AMD gets their 45nm chips out. "

I love to see competition against Intel as much as anyone, but its going to take more than a die shrink to put AMD CPUs operations back in the game. K10 wasn't nearly the boost it should have been, and its already getting a little long in the tooth.


RE: This isnt good news...
By FITCamaro on 12/30/2008 4:12:05 PM , Rating: 3
Some are saying the new 45nm chips offer the same overclockability as C2D. Given that Phenom isn't THAT much slower than C2D and Phenom's lower prices, this could help AMD. Put them back at the top, no. But definitely won't hurt.


RE: This isnt good news...
By theapparition on 12/31/2008 12:00:16 PM , Rating: 2
Problem is, even if you are right (which I don't agree with), Intel already has a new generation out.

AMD has NOTHING to compete with i7.


RE: This isnt good news...
By Amiga500 on 12/30/2008 4:18:08 PM , Rating: 3
K10.5 really does seem to be much better from all the preliminary stuff floating around the net. AMD have really improve the L3 latency which is making a BIG difference in many benches.

Sure, it can't go toe-to-toe with i7 at the high end, but it can give it a bloody nose at the low to mid range.

Especially considering platform costs.


RE: This isnt good news...
By FITCamaro on 12/30/2008 5:09:11 PM , Rating: 2
Yeah i7 looks really sweet but I'm just not going to spend that much for a motherboard and RAM. DDR3 is still expensive. I got 4GB of OCZ SLI DDR2-800 memory for $10 over the holidays. Same memory I've already got 4GB of.


RE: This isnt good news...
By 16nm on 12/30/2008 7:43:53 PM , Rating: 1
quote:
K10 wasn't nearly the boost it should have been...
What boost? If anything, I'd say K10 slowed rather than boosted. It certainly hurt earnings. As much as AMD didn't want a dog of a chip, K10 was a K9.


RE: This isnt good news...
By Operandi on 12/31/2008 12:09:10 AM , Rating: 2
K10 had the following problems.

1. It was too late.

2. It was built on too big of a process.

3. It couldn't scale fast enough to compete with C2D.

4. The initial revision suffered from design bugs.

Thats a lot to overcome but if half of those issues could have been avoided things would have been a bit different for the Phen. Some of it perhaps was to be expected such as the inferior manufacturing process and consequently the clock speed disadvantage, but the late introduction and the design bug really hurt AMD and should not have happened.


"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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