AMD Lays Off 500 Employees

Today AMD reported that the company is laying off 500 people worldwide, however the company is not merely trying to regain its footing.

According to a report from Reuters, Sunnyvale-based Advanced Micro Devices (AMD) canned 500 out of 15,500 employees, or 3 percent of its global staff, in an effort to cut costs and achieve a $1.5 billion "breakeven." However, the microprocessor manufacturer declined to comment on exactly where those cuts were made although manufacturing operations will not be affected. An additional 3,000 more jobs will be shifted over to AMD’s spin-off company The Foundry Co. early next year; The Foundry will serve as the primary processing unit manufacturer, taking control of AMD’s two plants in Dresden, Germany.

Additionally, AMD also replaced its chief executive back in July. After a six year run, CEO Hector Ruiz stepped down as pressure mounted to restructure the company. AMD’s president and chief operating officer Dirk Meyer thus took over, however AMD’s stock price continues to drop despite the restructuring, closing at $2.65 per share as of October 28, dropping a dramatic 90 percent since early 2006. Rival company Intel took advantage of the company’s woes by releasing new products while AMD staggered in financial blunders.

Unfortunately, cutting AMD jobs was already in the works even before financial troubles kicked in during September. Reducing the overall staff and injecting cash into company itself (via ATIC), AMD as the world’s second biggest microprocessor manufacturer seeks to move into a better position to take on Intel who owns roughly 80 percent of the microprocessor market. Earlier this year AMD cut 1,600 workers as well, making today’s layoff the second round of employee terminations this year.

"We were expecting the company to initiate some cost-cutting. In a move toward ’asset light’ they need to become a leaner company and we view this as a positive step," said JoAnne Feeney, an analyst with FTN Midwest. Apparently, the cost-cutting was much needed, as AMD lost $5.6 billion over the past eight quarters due to a costly acquisition and product delays.

"The headcount reduction is part of the company’s efforts to reduce our cost structure," spokesman Michael Silverman told MarketWatch. "We are examining all of our activities to make certain that each supports our objectives, and stop those activities that don’t."

AMD has already notified all U.S.-based employees who were being laid off in the latest round of cuts. That’s a good thing, because if they didn’t already know the axeman cometh, they certainly know now.

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  • Pei-chen
    Thank God models moved on quickly to other jobs. Too bad for the marketing people though.
  • nekatreven
    I really hope AMD keeps making progress...even with all of the foreign investor crap going on. Competition is needed, and I just like the company. In a fan boy sort of way but more towards the business side than the products side. :)

    Intel probably spends in 1 quarter on R&D what AMD makes in a year. Even if the numbers aren't that drastic...for their size and being in the position they still be holding 20% of the market, I have to say hats off to that.
  • TwoDigital
    AMD may want to try their hand in the multi-multi-core motherboard chipset business... since the i7 and Core2Quad/Xeon chips have been running so much faster, what's to stop AMD/ATI from making a new motherboard chipset that will let them build a mainboard with, say, 4 inexpensive quad-core phenoms?