AMD to cut 400 jobs

Written by Brett Thomas

May 14, 2007 | 10:07

Tags: #earnings #phenom #quad-core #quarter

Companies: #amd #ati

With the release of Intel's Core 2 Duo platform, there is little doubt that AMD has had its work cut out if it wanted to regain the performance crown in the CPU industry. The company's AM2 has been largely recognised as a patchwork solution, an upgrade to show that the company isn't comletely lounging about while Intel takes what's left of the market share. Unfortunately, it looks like the public isn't buying.

AMD announced its earnings for the first quarter of 2007 last week, which could be summed up in one word - 'dismal.' The poor sales of AM2 and the negative cash position from the company's acquisition of ATI was explained by AMD's CEO Hector Ruiz as 'unacceptable.' To help ease the blow on Wall Street, along with the news of the poor earnings report Ruiz announced the lay-off of up to five percent of its workforce, or 800 people.

The announcement was quickly followed by a list of guaranteed cuts - 430 jobs from R&D, Sales, Marketing and Engineering. Many of these jobs are in the USA, though a few are in the Ontario, Canada group. No jobs were lost in Dresden, Germany where AMD's fabrication plant is located. The effort to go 'lean and mean' could add a whopping eight cents per share to the bottom line and save the company over $40 million. If that's not enough, the other roughly 400 jobs will find themselves next on the chopping block.

Intel has done its own recent job cuts, eliminating 1,000 jobs from its New Mexico offices. The change was not based on going lean and mean, however - instead, it was for technological improvement. The lay-offs were for employees who worked on 200mm silicon wafers, and Intel has recently begun to use 300mm wafers.

Though AMD's financial figures are telling a tale of woe, the company has been very careful (almost a little too careful) to assure us that it's just going through a bit of a rough sales spot. Ruiz and company recently went on the record as saying its native quad-core solution is doing very well and that R600 (which is released today) will add a healthy contribution from ATI. However, the amount of energy going into assuring everyone of the company's waiting success is mildly alarming.

Do you have a thought on the job cuts or AMD's poor Q1 performance? Do you think Phenom and R600 are really enough at this point to put the company on safer ground? Tell us your ideas in our forums.
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