AMD confirms job losses amid revenue slump
AMD's short-term future looks bleak as the company attempts to step horrific losses by sacking 10 per cent of its workforce.
Signs that the company was struggling more than usual appeared when it warned of a 10 per cent drop in quarter-on-quarter revenue and a 13 point slip in margins - figures which equate to a loss of $157 million for the quarter. That massive loss comes despite a drop in operating expenses of seven per cent, leading to rumours that AMD would lay off around 20 to 30 per cent of its staff to cut operating costs still further.
AMD's announcement has confirmed that the rumours are true, although more expansive in scope than the company has planned: while AMD staff are going to be laid off as a result of the company's financial troubles, the total will amount to around 10 per cent - significantly lower than the rumoured 20 to 30 per cent cuts - which mean around 1,700 jobs are going to go.
AMD's chief executive Rory Read has laid out a plan to get AMD back in the black, however - and it involves shifting considerable assets away from the PC market. Rather than concentrating its efforts on developing, as the Red Team's fans have hoped, high-end chips to compete with Intel, the company is going to divert around half of its resources to embedded computing projects - in other words, tablets and other low-power areas. With AMD's Kabini accelerated processing unit (APU) system-on-chip design just around the corner, it's clear that AMD is hoping to beat Intel in the lucrative mobile market.
For now, however, AMD is admitting that times will continue to be hard: projected revenue for the next quarter is expected to decline by around 9 per cent. By Q3 2013 the company aims to be breaking even, if not making a profit - but that's a fair while for investors to wait while the company continues to haemorrhage cash.
AMD has yet to confirm the areas affected by the lay-offs, with rumours pointing to losses in the engineering and sales divisions - two parts of the company which will be critical to AMD's continued existence.
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Discuss in the forums ReplyI don't see why they would be.
I'm an AMD fanboy, but am currently running Ivy Bridge. If AMD go under we'll end up in a full on monopoly which won't do anyone any favours.
Gpu devision is also basically break even for the year, still don't think buying ATI has made financial sence in the long term.
They need to get back the high margin server markets if they are to survive, 5% market share in servers and 18% in consumer CPUs is shocking for a company that was at 50-50 in both 3 years ago.
Nokia lost 754million dollars so I don't see how 154mil is huge, it's tiny in reality with there cash reserve they will take another 8 quarters to go bankrupt Nokia in comparison would take 4 at those loses.
Have you seen IBMs share performance lately?!
I hope they will survive this and get back into business, even if it's not CPUs for high end PCs. As discussed in other articles, the PC hardware market is kinda f***ed right now, anyway. I mean how desperate must it be if retailers hope for Windows 8 to get sales back up again. :P
Intel pricing is already independent on what AMD puts on the market and the pricing levels in customer market are already pretty much established - 999 for the current highend CPU (Core i7 S2011 highend), 500 for the mid-highend (Core i7 S2011 mid-range), around 300-350 for low-highend (Core i7 S2011 low) and high-mainstream (Core i7 S1155), around 180-250 for mid-mainstream (Core i5 S1155), around 100-140 for low-mainstream (Core i3 S1155) and the sub-100 market for Celerons and Pentiums.
Look back to Sandy Bridge - you had same prices. S1156/S1366 ? Same prices. Even in the era of Core 2 Duos and Quads you had pretty much the same price ranges.
So as i said, Intel pricing is already independent on AMD and CPU prices wouldn't go up just because AMD leaving the market.
What would change is maybe the development tempo - right now you get a tick or tock every year for the mainstream. That could slow down to one and half or two years, but not much more than that, because again, Intel needs to sell and if you don't innovate, customer won't buy the same thing over and over again.
Where AMD exit would hurt is the graphics card segment.
But all this is irrelevant, as AMD would need about a decade or more to actually get close to bankrupcy.
The biggest problem with AMD though is the fact that they bought a graphics division (ATI) for a huge sum of money that they probably could've used to leverage and commit to their CPU roadmaps. That's the sad part to be honest. To be frank, AMD's management really didn't figure it out and they're paying for it. In diversifying their markets, they essentially robbed themselves of an ability to focus on one aspect of design. Admittedly desktop CPUs are on a downturn but their APUs are soon to be challenged given their anemic CPU performance and any integrated SoC will be outdone by either Atom or ARM based chips.
I'm not trying to be an AMD hater, I want them to survive, but as it looks the only thing that might survive all of this is perhaps the Opteron and ATi sectors of AMD. They might live off licensing things, but without vertical integration. They're boned. Logistically, they've got a CEO who's been trying to cut everything and then diversify in an attempt to bring back quarterly revenue back but the problem in a massively competitive market (and especially in the CPU market where you're eclipsed if you're AMD) is that if you split your already limited resources, you're only crippling yourself.
Furthermore due to these cuts, the roadmaps have been pushed back. Just like how Bulldozer was repeatedly pushed back. Times are bleak for AMD and that isn't good. AMD might survive of SeaMicro though. But honestly outside of their graphics division and perhaps parts of their server division. AMD might go insolvent in the next three years and sell off the rest of the company.
As for Intel? They'll just continue moving on. Their ticks and tocks might take longer, but given the lithography it's not surprising. AMD Graphics won't exit since they have some tasty deals with the console peddlers, but even that revenue might not last too long.
Unless of course APUs become all the rage. But Intel might supplant that with their ever increasingly powerful IGPs.
It would take many, many years. After the ATI deal, they were 2 years in $3000M loss. You know what, they were in loss the whole decade of '90s - every year, every quarter. So just because they are optimizing the number of employees where it should be it doesn't mean they are going to bankrupt :
http://pctuning.tyden.cz/ilustrace3/obermaier/amd_history_x/employees.png
2005 drop is Spansion spinoff, 2006 increase is result of buying ATI. By cutting 10% of workforce, they are going to drop back to ~10000 employees, in other words back to 2009 status.
Sure, they will probably have few years with tens or few hundreds million USD losses, but that won't make them go bankrupt. They will have to minimize the losses, maybe licence ARM or grab TI from hands of Amazon and start making mobile chips etc etc. They need to rethink and recreate their product portfolio, that's all.
There's practically no money in the contracts - the console makers drive very hard bargains.