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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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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.


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