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AMD to axe seven per cent of staff after poor Q3 performance

by Mark Tyson on 17 October 2014, 11:05


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AMD has announced its fiscal third quarter earnings results on Thursday, showing a worse-than-expected performance with a revenue of $1.43 billion, a 2 per cent year-over-year decrease. Also detailed in the results was a net income of $17 million representing earnings per share of $0.02. That was half of the Wall Street earnings expectations of $0.04 a share.

The chipmaker warned that it expected sales to sink even further in the fourth quarter, with revenue in the current period likely to decline as much as 16 per cent from the third quarter's $1.43 billion, predicting sales could be as low as $1.2 billion. Bloomberg's data indicates that the average estimate of analysts for Q4 is $1.48 billion, so we are likely to see targets missed again.

AMD's shares dived in after-hours trading (grey shaded area)

AMD's Computing and Graphics unit saw a 6 per cent quarter-over-quarter and 16 per cent year-over-year decline, which the company attributed to weaker chipset and graphics processor sales, mainly due to lower demand in laptops. The operating loss of the unit was $17 million, compared to $6 million in its fiscal second-quarter earnings.

On the other hand, although the Enterprise, Embedded and Semi-Custom unit also saw a dip of 6 per cent quarter-over-quarter and 21 per cent year-over-year in revenue, its operating income climbed from $97 million in the second quarter to $108 million in Q3.

"AMD's third-quarter financial performance reflects progress in diversifying our business. Our Enterprise, Embedded, and Semi-Custom segment results were strong; however, performance in our Computing and Graphics segment was mixed based on challenging market conditions that require us to take further steps to evolve and strengthen the financial performance of this business. Our top priority is to deliver leadership technologies and products as we continue to transform AMD," new CEO Dr Lisa Su said in a statement.

AMD Semi-Custom processors include those inside the 'next-gen' games consoles

The announcement comes just over a week after the chipmaker appointed Dr Lisa Su as the new CEO, replacing former chief executive Rory Read. Following the earnings report AMD announces its restructuring plan which includes cutting seven per cent of its workforce, or around 710 jobs, by the end of Q4 2014.

"While decisions that impact the size of our global team are never entered into lightly, this is the right step to ensure we prioritize our resources and engineering investments in our highest-priority opportunities that can drive improved profitability and long-term growth," Su explained.

The global job reduction is expected to cost the chipmaker $57 million in severance payments in the current period, and a charge of $13 million in the first half of 2015. The cut will result in savings of around $9 million in operating expenses in Q4 of 2014 and another $85 million next year.

HEXUS Forums :: 5 Comments

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Better than last time at least: http://www.dailytech.com/AMD+Set+to+Restructure+After+Poor+Q3+Earnings+Layoff+15+of+Workforce/article27985.htm

Is this becoming a regular thing now, every October on an evenly numbered year?
Gah, come on AMD, we are all cheering you on!
Hope my brother-in-law isn't affected. He's done well to dodge the redundancies so far.
If I'm reading that correctly, it looks like AMD's revenue hasn't fallen much but the Operating income has taken a big hit this year, which means the operating expenses has shot up.
Hmm, I hope AMD hold it together. Hopefully those workers going get employment sorted out before hand.