AMD takes $157 million loss cuts 15% of its workforce
We already learned about this last week, the good news is that the number of layoffs is smaller then expected, the bad news .. it's still a lot. All those poor people. AMD announced a third-quarter net loss of $157 million, or 21 cents per share, on revenue of $1.27 billion. This compares to a profit of $77 million on revenue of $1.41 billion in the previous quarter, and a profit of $138 million on revenue of $1.69 billion in Q3 2011. In the third quarter, sales of the company's Computing Solutions plunged 11 percent sequentially and 28 percent year-over-year due to weak consumer demand for PCs as well as lower average selling prices across all geographies. Graphics segment revenue took a hit of 7 percent sequentially and 15 percent year-over-year, while GPU revenue crashed 14 percent sequentially.
AMD blames its poor financial results on a reshaping of the PC industry that is happening at a much faster pace then they anticipated. The current quarter will be even worse, in its earnings statement, AMD predicted that its fourth quarter revenue will be down 9 percent, plus or minus 4 percent, sequentially.
In an attempt to turn the company around, CEO Rory Read announced a restructuring plan that will reduce AMD's global workforce by about 15 percent before the end of the year. Approximately 1,770 workers will be let go, a move that will reduce operating expenses by about $190 million in 2013.
AMD (NYSE:AMD) today announced revenue for the third quarter of 2012 of $1.27 billion, a net loss of $157 million, or $0.21 per share, and an operating loss of $131 million. The company reported a non-GAAP net loss of $150 million, or $0.20 per share, and a non-GAAP operating loss of $124 million. AMD is also announcing a restructuring plan designed to reduce operating expenses and better position the company competitively.
“The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD,” said Rory Read, AMD president and CEO. “It is clear that the trends we knew would re-shape the industry are happening at a much faster pace than we anticipated. As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model. Our restructuring efforts are designed to simplify our product development cycles, reduce our breakeven point and enable us to fund differentiated product roadmaps and strategic breakaway opportunities.”
AMD’s restructuring plan, a significant portion of which will be implemented in the fourth quarter of 2012, will include a workforce reduction and site consolidations.
AMD expects that the restructuring actions taken in the fourth quarter of 2012 will result in operational savings, primarily in operating expenses, of approximately $20 million in the fourth quarter of 2012 and approximately $190 million in 2013. The savings will be largely driven through 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.
AMD is also putting in place a business model to break even at an operating income level of $1.3 billion of quarterly revenue. The company is targeting to achieve this by the end of the third quarter of 2013.
“Our restructuring efforts are decisive actions that position AMD to compete more effectively and improve our financial results,” said Mr. Read. “Reducing our workforce is a difficult, but necessary, step to take advantage of the eventual market recovery and capitalize on growth opportunities for our products outside of the traditional PC market.”