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AMD tightens its belt one more notch

by Scott Bicheno on 16 January 2009, 14:43

Tags: AMD (NYSE:AMD)

Quick Link: HEXUS.net/qaqqc

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Another round…

Sadly it's hardly out of the ordinary to report a round of redundancies in these economically fraught times and AMD is no exception. The thing that makes the news of another 900 people being cut from chip company AMD, however, is that it's just the latest of many.

Notwithstanding its own unique challenges, AMD is in the same position as everyone else; of having to reduce its costs in the face of a decrease in business. But the fact that it's already in the middle of a pretty extensive streamlining operation makes us wonder how much fat there is left to trim.

Anyway, the facts are that the ‘product company' (which is AMD minus The Foundry Company) is going to going to add 900 to the existing 200 people it expected to lose in Q1 09. This 1,100 amounts to nine percent of the current headcount and should bring the level down to around 11,000.

There will also be some pay cuts, starting at the top and commencing in February. Here's what AMD's official statement had to say on the matter:

  • Subject to the approval of the Compensation Committee of the Board of Directors and execution of an amendment to his employment agreement, CEO Dirk Meyer will be taking a temporary reduction of 20% in base salary.
  • In the U.S. and Canada, we will be implementing similar salary reductions of 15% for VPs and above, 10% for all other non-overtime eligible employees, and 5% for all overtime-eligible employees.
  • Outside N. America, we will be implementing voluntary pay reduction measures consistent with local policies and regulations.
  • Suspend the 401K (U.S.) company match and delay implementation of the RRSP (Registered Retirement Savings Plans - Canada) company match program.

This was the conclusion of the statement:

These actions, while difficult, will allow AMD to better navigate the turbulent economic conditions while protecting our core capability to execute our technology roadmaps and position AMD for long-term success.

 



HEXUS Forums :: 1 Comment

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Its sensible and as said will help keep costs down. Yes they are backed by an enourmous fund group now, they have no problems staying viable, but these business men are rich, because they run well oiled business machines(pun intended ;) ). Just because you have trillions in the bank between them doesn't mean they should simply throw away a couple billion that isn't needed on people with no work to do.

Sales are down, not a huge deal for AMD, due to capacity they can't actually increase market share anyway. Their goal is, make as little loss as possible till the 3rd fab is up, theres little point spending on a massive staff in marketing, when they aren't able to increase market share is there? Intel have excess capacity and spend millions on advertising to sell more chips, the closer to full capacity they are the more money they sell. AMD isn't in that boat.

AMD are essentially riding the recession through till they have their new fabs up and running, at which point you would expect to see a lot more spent on R&D and marketing and jobs being increased. Infact you would expect spending on the Phenom, and possibly bulldozer to have been scaled back massively. Again theres little point spending say 5billion on R&D, making a chip that completely stomps the i7, everyone wants one, and you can only produce say 10million a year and 500million people want one. When you can spend 200million on R&D, make a chip thats decent value and close enough in performance that its value makes it a worthwhile buy, but 10million people want it and thats how many you can make for now.

Its responsible and inteligent running of a successful company with a massive future. Bulldozer, its hard to say if it will have many cutbacks, its due in a couple of years and thats just about when the company is going to be wanting to increase the demand for its products so will want a very competitive chip.

AFAIK some of the job losses are due to the company splitting, you'll undoubtedly find some people who were replaced, exec's that the Foundry wanted their own people in for. Some projects scrapped, marketing departments afaik have taken a huge hit on people and quite rightly its just wasted money.

The only thing thats weird is it didn't come sooner, didn't Intel announce 10% of their workforce was being cut not all that long ago. The whole markets going to be a bit poo for 2-3 years I would think, but after that expect Intel and AMD to come out of a recession fighting hard.