RSSAMD to terminate 100 more than planned
By Scott M. Fulton, III | Published December 30, 2008, 10:20 AM
In an SEC filing yesterday, the CPU maker disclosed that it will incur a slightly larger restructuring charge than earlier estimates, due to its need to trim about 600 employees from its roster starting this quarter, rather than 500.
At some point, there should be a turnaround for struggling AMD, but it's not here yet. Last month, the company announced it would have to trim 500 positions worldwide from its corporate payroll, in a restructuring effort connected to its workforce reduction plan of 1,600 announced last April.
Yesterday, the company informed the US Securities and Exchange Commission that the 500 number being eliminated starting with this fiscal quarter would actually be higher by 100.
"The Plan primarily involves approximately 600 employees who were notified during the fourth quarter of fiscal 2008 that their employment with the Company would be terminated, and additional cost reduction actions that either have taken place during the fourth quarter of fiscal 2008 or will take place in fiscal 2009," yesterday's SEC filing reads. "As a result of its current analysis, the Company now estimates that the restructuring expense that it will record in the fourth quarter of fiscal 2008 will be approximately $70 million."
In an almost morose way, an employee reduction plan by any company can be perceived by shareholders as a long-term investment in the company's future. In the short term, workforce reduction is a very significant burden -- the gains that come from not paying folks' salaries and benefits are not appreciated immediately, since it costs so much to support those who are being let go. Last month, AMD estimated the cost of terminating 500 employees, starting with its fiscal fourth quarter 2008 and moving into 2009, would be $50 million. Now, we know it will cost AMD 40% more to terminate 20% more positions, with $45 million of those expenses to be charged next year.
In the same filing, the company also warned that it expects to incur yet another material charge as a result of the deteriorated goodwill suffered between the time the acquisition of graphics chip maker ATI was announced in October 2006, and the time it was enacted. Goodwill is the estimated value of an acquisition over and above its material assets, which is essentially how much faith the acquirer has in the acquired company's good standing in the market. Last year at this time, when the deluge of bad news began gushing from AMD, its president and now CEO, Dirk Meyer, revealed his company would have to assume a one-time write-down charge, equal to how much less extra value ATI actually brought to AMD. In July, that charge amounted to an astonishing $880 million, from a merger that was originally valuated at $3.2 billion.
And now we learn that even this much wasn't enough. AMD went so far as to hint that it may yet uncover some previously undisclosed liabilities, perhaps related to intellectual property -- "intangible assets" -- that should have been uncovered long ago.
"The Company [AMD] expects that the impairment charge will be material, but, as of the time of this filing, the Company is unable to estimate the amount or range of amounts of the impairment charge," reads the SEC filing yesterday. "In addition, the Company will also perform an analysis to identify whether there is also potential impairment of any of the remaining identifiable intangible assets acquired in the ATI Acquisition."
isn't better to layoff one multi millionaire ceo instead of hundreds who will loose their income and homes and make the unemployment lines even longer?
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|No.
Especially if those employees are not directly nor strategically contributing to the income and increased welfare of the company.
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|If AMD can't afford financially to design a faster CPU than Intel then maybe they should pull out of the CPU market and focus on GPU's instead. Considering the fact that all of Intel's Core 2 processors (including the dirt cheap Pentium branded ones) are considerably faster than AMD's 64-bit processors there is no point in buying an AMD processor.
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|I admit I haven't kept up on bechmarks, but I have never been able to find decent ones when shopping for cpus.
Example: Priced out a mid-range PC on Mwave.com recently. The little information I could find comparing the intel cpus available with the AMD cpu's available lead me to believe the comparably speedy intel cpu's were at least $50, if not up to $200 more than the AMD, slightly slower equivalents.
Am I looking in the wrong places?
(This is a serious question, I have no loyalty to AMD or Intel...just price/performance)
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|In the mid-range, for the same benchmark speed an Intel CPU is typically quite a bit more expensive than AMD. However, that same Intel CPU uses much less electricity under load than the comparable speed AMD CPU. Less heat produced means that everything in the computer will be more reliable (hard drives, power supply), and the energy cost savings can pay for the price difference over time, especially if your computer is under load constantly.
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|This is going to sound very Fanboyish.. but here we go:
Until the Core i7 chipset and CPUs, all Intel chips needed the Northbridge/Memory Controller Hub(which ever you want to call it) which requires it own power source, while AMD doesn't needed it and rather the CPU with it's intergrated memory controller needs less power over all.
This part of the reason why AMD has dominated the server market in terms of heat and power usage.
Again, this has changed with Core i7, and haven't seen a lot of power usage numbers regarding Core i7 compared to AMD's.. but I'm sure more numbers will be coming out.
Anywho, just my 2 cents.
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|Of course, if you adequately ventilate and have a decent PWS, that's not really an issue.
The AMD parts still provide a better price/performance ratio.
It sucks. I really would like to see the Intel parts come down in price now that they've gotten around AMD's hyperthreading lead, but ... still waiting.
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|Software developers are much more likely to support Intel's SSE 4 instructions than AMD's variant. This means that Intel's Core 2 CPU's are significantly faster at multimedia tasks and gaming than AMD's 64-bit processors. The extra money spent on a Core 2 CPU is well worth it.
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|Compilers can be coded to take advantage of both sets, just as they did when they first began writing competing "enhancement" bits. I don't think it will be a huge issue.
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|You're right on the money...Absolutely they are.
The angst on the part of so many (e.g.: "If AMD can't afford financially to design a faster CPU than Intel then maybe they should pull out of the CPU market and focus on GPU's instead") is a result of their failure to understand the underlying economic model of which these two are literally a textbook example. Once you understand the model, these two function almost like clockwork.
The problem with this seemingly neverending issue here is that so many think that Intel and AMD are supposed to be 'equal". They are not, and will not be.
Only the serious mis-step by Intel allowed such an anomalous situation to temporarily occur several years ago.
Again, these two companies represent a text book respresentation of the Value Pricing Model - which is simply an implementation of Schumpeter's Creative Destruction concept. AMD is the follower while Intel is the leader.
Step1: Company A (Intel) first to market:
Company A is first to market, value prices (Charges a high price that the market will bear), and quickly reaptures its NRE(non recurring engineering costs). It is now able to lead the price degradation slope.
Step2: Competitor CompanyB (AMD) 'sees' what company A has done and some period after introduces a competitive product for less money.
Step3: CompanyA (Intel) now reprices, as it may now reduce prices and still realize planned margins as NRE costs have been recovered.
Step4: CompanyB (AMD) tries to match company A prices before it recaptures its NRE.
Step5: CompanyA (Intel) now introduces a new higher priced next replacement product and starts the process all over again - repeating at step1 and the cycle repeats.
The continuing flaw in the expectations of so many (and the reason this strange perception persists) is that they think these are equally footed companies. And thus the angst and confusion continues, oh my! They are not.
The fact is, like it or not, economic models do play a role in business models. ;-)
But not to worry, any such understanding will be quickly lost and the same angst and fanboy whining will return with the next thread mentioning Intel and AMD. ;-)
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