RSSAMD confirms 10% workforce cut, declining outlook
By Scott M. Fulton, III | Published April 7, 2008, 6:27 PM
The worst is not over by a long shot for AMD. This afternoon, the company confirmed it would have to make very painful cuts, the repercussions of which are already being felt in terms of declining revenues.
Up until today, AMD had been saying it expected its revenue from the first calendar quarter of this year to decline "in line with seasonality" -- meaning, it would be lower than over the Christmas holiday because January always drops from December. And analysts had been responding to that claim, for the most part, with disbelief. As it turned out, the analysts were right.
Late this afternoon, ten days prior to its scheduled quarterly earnings report, AMD warned investors that its first quarter revenue would indeed come in lower than expected. Worse, however, is the news that the company plans to reduce 10% of its workforce by the end of this September, and will incur an extra restructuring charge in so doing.
The move is the clearest indicator to date that AMD's financial woes are not, as CEO Hector Ruiz indicated in March 2007, a "blip." "Seasonality," as companies put it, tends to be a high-single-digit point drop in revenue, but in its warning this afternoon, AMD said it expected a 15% revenue decline over the previous quarter, to around $1.5 billion.
Just three weeks ago, two AMD spokespeople told BetaNews that the company is not laying off 5% of its workforce, and that did not depend on what our definition of "is" was. But that was a present-tense answer, and it did not reflect what the company intended to do in the future...or how soon that future would come.
Like or dislike AMD, they are important to consumers to help keep CPU prices competitive. If AMD falls CPU (read Intel) prices will rocket.
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|Yes competition is good, but someone will take their place. AMD is pretty much dead now, they've run it into the ground. Some other company may buy them and get things in order, or the rumors of some company buying VIA, whatever. It won't be just Intel though.
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|They made a bad generation of chips and they are run into the ground. Intel's last generation wasn't so swift so the roles have swapped. Happened before and it'll happen again. AMD will be fine. Maybe Cyrix will come back, God I hope not.
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|Exactly. Up until Athlon came around, in the K6 times, AMD was always way behind Intel. Still, they made a nice comeback. Less competition in a market is never good for the consumer. Even the most die-hard Intel fanboy with half a brain can see the benefit of competition - their favorite CPU will cost much less. Monopolies tend to make the price very high. No wonder these days a CPU costs less than a copy of Windows.
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|Maybe Cyrix will come back
^^^
This should be a capital offense. We need to have us a hangin, boys. :p
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|As expected, the full extent of AMD's misfortunes are announced. Was no surprise really.
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|A sad day for AMD. The performance of their newer offerings just can't stack up to Intel. They need to get their act together, or as the article states, they'll be stuck as a 'value' chip maker. Their recent loss of PC and gamer enthusiasts has got to hurt. Any more would be devastating.
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|I don't think they've *lost* the enthusiast market, but it's definitely getting there.
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|Having phenom late, and with bugs was the killer.
They will have some serious work when Penryn takes hold.
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|Agreed.
But hey, they're getting back to where they were just before they b****-slapped Intel. Hopefully "hitting bottom" will give them the initiative they need to do it again.
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|I'm sorry for the employees, but hey, it's a good time to buy AMD stock.
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|Oh sure, that's what you told me about 3dfx.
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|Heh...
There's one born every day, boys. :p
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|may I interest you on some creative stock?
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|come on guys, it's good for a short term pump and dump. buy it at 5ish and dump it at 8 or so in the next 6 months.
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|The thing is Intel has this problem called arrogance. It will eventually get the better of them as it did in the P4 days.
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|If arrogance produced the core 2, then any more of it will obliterate AMD. I was an AMD fanboi up until the day I saw a core 2 running up close and personal. And I haven't looked back.
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|No Intel had the market wrapped up and was arrogant enough to think that they could continue to milk the Pentium 4. The Athlon 64 arch was a clear slap in the face to Intel and was the first time AMD really challenged Intel's dominance. Intel's arrogance led them to think that AMD was incapable of such a challenge and now that they have AMD beaten down again sooner or later that same arrogance will shine through again.
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|Very good.
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|Decline Outlook? Well no wonder, it's an expensive product! Should go open source AMD! Get with it!
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|I guess you can say that they where not lying when they said they where not to cut 5% of their workforce.. when in reality they where going to cut 10%.. bah semantics, for flat out lies ^^
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