AMD cutting 7 percent of its workforce and it gave a lower-than-expected forecast

[Deleted member 2197]

Struggling U.S. chipmaker Advanced Micro Devices Inc (AMD.N) said on Thursday it was cutting 7 percent of its workforce and it gave a lower-than-expected revenue forecast for the current quarter, sending its shares lower.

The company's third major round of job cuts since 2011 comes a week after AMD said Chief Executive Officer Rory Read had been replaced by Chief Operating Officer Lisa Su, an unexpected move that sparked speculation about fresh troubles at the chipmaker and hurt the company's stock.

"They’re cleaning house and getting it set up for Lisa Su to take over," Stifel Nicolaus analyst Kevin Cassidy said of the workforce reduction, which AMD said would be made by December and save about $9 million in the fourth quarter and $85 million next year.

AMD has been expanding into new markets such as game consoles and low-power servers but progress has been slower than demanded by Wall Street.

In a statement, AMD reported third-quarter revenue and gave a forecast for current-quarter revenue, both of which missed expectations and its shares were down 5 percent in extended trade.
AMD said its revenue fell 2 percent to $1.43 billion in the third quarter, missing Wall Street expectations.
The company said its fourth-quarter revenue would fall 13 percent, plus or minus 3 percent, from the September quarter. That would be about $1.244 billion.

Shares of AMD were down 5 percent extended trade after closing up 1.15 percent at $2.64.

http://www.reuters.com/article/2014...20141016?feedType=RSS&feedName=technologyNews

 

[Grall]

What kind of people can AMD really afford to fire these days - not engineers, one would think, and surely their administration organization has to be pretty damn lean these days considering they've been running at a loss for years now?

 

[Alexko]

They could probably survive without the people in charge of tying CPUs to weather balloons.

 

[3dilettante]

This news does seem to fit in the doom and gloom thread.

As far as who AMD can afford to let go, I'm not sure if that set is large enough to encompass the number it is likely to let go in the upcoming contraction, and I hear a ring of truth to predictions that AMD is likely to have another round after that.
There are reports of AMD outsourcing its chipset design work to ASMedia, and a transfer of IP and 150 or so engineers to Synopsis in exchange for access to more tools and IP.

It does look like AMD has already been trying to extract trade value from its players before it cuts them outright.
The payoff of the transfer as given in the press release is apparently up to $450 million in cost efficiencies.
The cost is that some chunk of what underpins AMD's R&D and interface IP will in a little while cease to be a differentiator for AMD and might be used to deny it future customers. If the engineers involved were primary contributors to this, it sounds like a big chunk of things involved in high-performance off-chip IO is no longer going to be something AMD can uniquely offer.

Perhaps the argument could be made that the expanded access to multiple advance node IP and toolsets was a bigger win, since AMD needs to hedge its bets more on being able to field customer requests across a more diverse terrain that it could ever afford to cross on its own. At the same time, the need to cater to a generic client set means bespoke/superior solutions would be counterproductive.

If AMD is fully drinking the 2.5D integration colored-sugar-water-drink, it might be counting on a more limited subset of interface IP for on-package or stacked communication and less demanding tech for the remainder. With the higher levels of integration, much of it would based on what the foundry is offering anyway.
Intel and Micron could come into the picture if AMD gives up on controlling its own memory destiny and goes HMC, and that doesn't seem like an impossible next step given everything else it's trying to leverage... customizable... synergistic... efficiencies... execution... uh... buzzword from.

The negative interpretation is that AMD could trade some of the crown jewels and a portion of its brain trust because the competitive quality of the former and the quantity of the latter are only going down anyway.
I'd like to think AMD will still have something compelling to integrate once it reaches its ideal level of customization ability, as well as something well-improved as it is well-leveraged.