Just before Christmas, AMD released information of the restructuring and cutbacks that went on in November. As a result of the restructuring, it was estimated that more cutbacks were likely in 2009 and it looks like we could be seeing the first of those this month. AMD reports that it plans to cut 1,100 workers, or 9 percent of its global staff, and slash the paychecks of current workers still employed.
As the global economy continues to plummet, companies are taking a hit below the belt, laying off employees, restructuring and regrouping in hopes of staying afloat in a sea of financial misery. Although last week's CES '09 exposition seemed hopeful in re-energizing the electronics industry, reports of cutbacks continue to worm their way into the media and offer consumers little hope.
Just yesterday, Intel reported that its fourth-quarter profits fell 90 percent. Overall sales fell 23 percent as well, revealing just how drastic PC sales have declined during the financial crisis. AutoDesk also reported layoffs, cutting back 10 percent of its staff, or 750 employees. Motorola also reduced its workforce by 6 percent, or 4,000 workers. Internet giant Google has even slashed its staff by 100 workers.
AMD, the second largest PC microprocessor manufacturer and Intel's main rival, is the latest industry giant to report hard times, saying that it plans to cut 1,100 jobs - or 9 percent of its global staff - and reduce the paychecks of current employees. These cuts will be the third round of layoffs for the chip manufacturer in the last year, with 1,600 employees released in early 2008. Then towards the end of December, details emerged in the form of an SEC filing, which showed the company laying off another 600 people; 100 more than the initial figure of 500 an AMD spokesperson announced in November. One of the knock on effects of the extra 100 layoffs was that the company’s total cost of restructuring for Q4 shot up to $70 million, $20 million more than the estimated $50 million earlier in the quarter.
And while AMD today also announced the impairment of another $62 million of intangible assets (expenses), the company is still recovering from product delays and a $5.6 billion debt stemming from its acquisition of ATI Technologies. AMD reported in a regulatory filing that it would take a $622 charge related to ATI's acquisition, writing down the graphics chip manufacturer's value lower than the original acquisition price; AMD previously reduced ATI's worth nearly $2.5 billion.
According to the company, 900 of the 1,200 terminated employees will come from the main corporation, however the additional 3,000 employees will come from attrition and the sale of a business unit. The company also said that cuts in pay for current employees will only be temporary, with AMD's CEO and Executive Chairman - Dirk Meyer and Hector Ruiz respectively - will taking the largest pay cut: a whopping 20 percent reduction. Salaried workers will see a 10 percent reduction in pay, whereas hourly employees will receive 5 percent less a paycheck. Other top management employees - including vice presidents - will take a 15 percent hit in the wallet.
Surprisingly, AMD shares actually rose 3 cents to $2.29 at 4 p.m. Friday in the New York Stock Exchange. Since the beginning of 2008, its shares have fallen almost 70 percent, however currently there are 12,000 workers still employed, with an additional 3,000 unaffected workers residing in the spinoff company.
