AMD Set to Restructure After Poor Q3 Earnings, Layoff 15% of Workforce
October 19, 2012 9:05 AM
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15% of its global workforce will be let go
AMD has officially announced its financial results for Q3 2012. The company didn't do well with revenue of $1.27 billion, which is a 10% sequential decrease and a 25% decrease year-over-year. AMD reported a net loss of $157 million including a loss of $.21 per share. The operating loss for the quarter amounted to $131 million.
AMD is set to begin a restructuring plan designed to reduce its operating expenses and position the company to be more competitive in the future. AMD says that a "significant portion" of its restructuring plan will be implemented in Q4 of 2012 and will include a workforce reduction along with site consolidations.
The chipmaker expects the restructuring to providing operational savings of approximately $20 million in Q4 and approximately $190 million in 2013. AMD plans to reduce its global workforce by approximately 15% and is largely going to be completed in Q4. Previous reports have estimated that AMD would lay off, as much as
30% of its global workforce
“Our restructuring efforts are decisive actions that position AMD to compete more effectively and improve our financial results,” said AMD CEO Rory Read. “Reducing our workforce is a difficult, but necessary, step to take advantage of the eventual market recovery and capitalize on growth opportunities for our products outside of the traditional PC market.”
AMD reports that its computer solutions segment revenue decreased 11% sequentially and 28% year-over-year. AMD believes that the sequential decrease was driven by weak consumer demand for computers and other devices. AMD also saw difficulty with its graphics processor unit with revenue decreasing 14% sequentially due to low unit shipments to OEMs. Operating income for that division was only $18 million compared with $31 million in Q2 of 2012.
“The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD,” said Read. “It is clear that the trends we knew would re-shape the industry are happening at a much faster pace than we anticipated. Our restructuring efforts are designed to simplify our product development cycles, reduce our breakeven point and enable us to fund differentiated product roadmaps and strategic breakaway opportunities.”
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At this Point
10/19/2012 11:45:17 AM
I'm starting to think the board has been intent on driving AMD into the ground since the Core2 came out. They refused to remove Hector Ruiz, when the company was bleeding out $300+ million every quarter for almost 2 years, while he did nothing to try and remedy it. They didn't finally get rid of him until the decision to spin off Global Foundries happened, and he's in charge of that now. At which point Dirk Meyer stepped in, brought the company back into the black in a fairly short time. The stocks were at almost $1 when he took over, and they got back up to 8ish I think before they canned him. He also got both CPU and GPU divisions executing on a good time schedule. Better yet, they got rid of him for "not doing what they thought was in the best interests for the shareholder".
I'm kinda confused about how the current downward spiral ever since Rory Reed took over is in the best interest of the shareholders? This is a classic example of exactly why you don't put a business or non engineering/tech based executive in charge of a company like this. The reason Intel is so well lead, is because Otellini is because he's been with the company since 74, and had been general manager over their microprocessor group for some time before moving up. Which means he knows his people well, and what they are capable of. Reed on the other hand is a good example of corporate management mentality douche baggery.
RE: At this Point
10/19/2012 1:11:17 PM
Interesting analysis. We've seen this sort of behavior drive previously great companies into the ground before. I really hate seeing AMD get subjected to such madness...
RE: At this Point
10/23/2012 7:09:18 PM
Although quite late to reply, I just signed up to say I also pretty much agree with this.
I've only some-what recently started following Intel and AMD closely so can't say how AMD performed under each CEO.
But something I've come to realise is that when shareholders are driving a company, it will only result in its downfall as the fat cat shareholders are only interested in milking a company for money until they move to a different company. Thus, they're not the least bit interested in the company itself or what products it makes or its innovation, rather only how much it will pay out to them.
Thus, I think one of the key things Apple (and Steve Jobs) did to become innovators again was to cut of the shareholders and stop paying dividends.
i.e. it was largely Steve Jobs who dictated the terms over the shareholders.
"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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