Bloomberg News

AMD Will Cut 10% of Workforce to Save Money for Investment

November 04, 2011

(Updates with estimated savings in fourth paragraph.)

Nov. 3 (Bloomberg) -- Advanced Micro Devices Inc., the second-largest maker of computer processors, plans to eliminate 10 percent of its workforce in a bid to cut costs and shift its products into faster-growing markets.

The reduction will occur across all levels of the company and carry $105 million in restructuring expenses, mostly in the fourth quarter, Sunnyvale, California-based AMD said today in a statement. AMD had 12,019 employees as of Oct. 1.

Chief Executive Officer Rory Read, who was appointed in August, is looking for ways to boost profitability as AMD transforms into a chip-design business. The company spun off its manufacturing operations in 2009. AMD also reduced its workforce that year, shedding 1,100 jobs.

AMD expects to save more than $200 million in operational expenses in 2012. The company plans to use the money to invest in lower-power chip designs and processors that are suited to the rapidly growing data-center market. AMD also will improve its ability to sell chips in emerging areas.

In his first earnings conference call with analysts last week, Read said customers told him AMD needs to work on its execution. The company is a distant No. 2 to Intel Corp., which controls more than 80 percent of the market for personal- computer processors.

AMD shed its manufacturing arm through a joint venture with the government of Abu Dhabi, which led to the formation of Globalfoundries Inc., a company that still handles most of AMD’s manufacturing. While the arrangement has helped restore profitability at AMD, manufacturing slip-ups have hurt growth. AMD’s third-quarter sales missed its initial projections after Globalfoundries couldn’t supply enough of AMD’s new laptop chips to meet demand.

AMD shares were little changed in late trading following the announcement. The stock, down 30 percent this year, had closed at $5.73.

--Editors: Nick Turner, Tom Giles

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles@bloomberg.net.


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