AMD posts $157 million loss, cutting workforce by 15 percent in Q4

Shawn Knight

Posts: 12,300   +120
Staff member
Things could quickly be going from bad to worse in the event you work for AMD or know someone that does. The struggling microprocessor company has reported a loss of $157 million ($0.21 per share) for the third quarter on...

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Brewskie

Posts: 28   +6
This is not good news.

If AMD closes down ATI goes down with it, unless they branch it off first.

If ATI goes away then competition goes away with it.

Competition drives innovation. With just one major maker of video cards, nVidia, the pressure to innovate will be gone unless the consumers raise hell.

While I don't buy ATI cards I realize that the competition is what drives the industry.

So I hope that AMD can turn this around and keep innovation alive.

My 2¢
 

dividebyzero

Posts: 4,840   +1,264
@ Shawn
15 percent of AMD’s workforce will soon find themselves without employment.[...] It’s not as bad as the 20-30 percent estimates that were circulating via rumor mill earlier this week, but it’s a substantial reduction nevertheless.
The 15% quoted in the Q3 2012 is only the first round in this cycle of layoffs.
From the Q3 press release:
a reduction of AMD's global workforce by approximately 15 percent, which is expected to be largely completed in the fourth quarter of 2012. The company currently estimates it will record a restructuring expense in the fourth quarter of 2012 of approximately $80 million in connection with these actions.
And from the transcript of the Q3 call transcript - Devinder Kumar -Interim CFO (2nd last paragraph in his opening statement)
We continue to evaluate our cost structure and anticipate restructuring actions in the first half of 2013, which will result in additional restructuring charges. However, we are currently unable to quantify these amounts.
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If AMD closes down ATI goes down with it, unless they branch it off first.
AMD won't close down. They will however, likely morph into a much changed company.
The FTC won't allow Intel to reign as a monopoly in the x86/x86-64 sector, so the worst case scenario is that Intel itself has to supply funds (or a means) to keep AMD viable. AMD and Intel have a cross-lease agreement for x86/x86-64 IP in place, so they both pretty much need each other.
Also likely is that AMD limps along shedding employees and possibly IP along the way until either 1. AMD become fiscally sound, or 2.their value drops low enough for the remaining patents and IP to be attactive for a takeover bid by another company -AMD carries a substantial debt that a potential suitor would inherit, and even the financially wasteful Abu Dhabi royal family (ATIC/Mubadala) who already own 15% of AMD don't seem interested in investing further.

AMD aren't going away, but tossing away employees and cutting R&D to keep shareholders off their backs and a rosy balance sheet for a couple of quarters at the expense of long term outlook doesn't make for a bright future.
 
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Duopolies only last for so long.

In the end, THERE CAN BE ONLY ONE!

- Duncan MacLeod
 

ikesmasher

Posts: 3,051   +1,373
This wouldnta happened if they didnt try to beat intel, but instead stuck to their price/performance ratio solution that worked so well with phenom IIs and many gens before it.
 

dawei1993

Posts: 37   +1
This is actually tragic. I mean.. I am an Intel user and all, but without AMD, Intel would monopolize the already tilting market. It's not like AMD doesn't make bad products. Intel just has too much customer loyalty... usual customers are less informed of AMD products and are unwilling to move from Intel to AMD. It's time for me to get a new computer, and I am seriously considering AMD now.
 

dividebyzero

Posts: 4,840   +1,264
This wouldnta happened if they didnt try to beat intel, but instead stuck to their price/performance ratio solution that worked so well with phenom IIs and many gens before it.
AMD's current state date backs from decisions made when they were riding high in 2007- everything else since has been trying to apply a band-aid to a severed artery.
AMD's problem stem from:
1. Accepting ATI valuation at face value without investigating the companys true worth, and overpaying as a consequence. (As shown by their write down shortly afterward...if not the one after that)...saddling AMD with a debt that has basically crushed the life from it.
2. Becoming complacent after the success of Athlon64, and taking absolutely no notice of what their competitor was doing.

BTW: This is the company that AMD's board have hired to help with the "restructuring", so I have a feeling that the hurt isn't quite over for AMD.