AMD to Cut 15 Percent of Work Force

MSN Money/CNBC/Reuters | November 14, 2002 4:51:00 PM ET | Staff

[arete]

SUNNYVALE, Calif. (Reuters) - Microprocessor maker Advanced Micro Devices Inc. (AMD) on Thursday said it will lay off 2,000 employees, or 15 percent of its work force, part of its effort to trim expenses by $350 million in 2003 as sales slump.

The company said it will reduce its global staff by 2,000 positions by the end of the second quarter of 2003, leading to a charge of ``several hundred million dollars'' in the fourth quarter. The job cuts had been expected. AMD had 13,000 employees at the end of the third quarter.

Some 1,000 employees were notified on Thursday, AMD said in a statement, with the cuts spanning company operations in the United States, Europe and Asia.

A weak personal computer market and a build-up of inventories of its Athlon and Duron microprocessors among PC makers and distributors hurt AMD in the third quarter, as did stiff competition from its larger rival, Intel Corp. (INTC)

AMD shares were up 3.94 percent, or 25 cents, at $6.59 at the close of trading on the New York Stock Exchange.

AMD Chief Financial Officer Robert Rivet last week warned analysts that layoffs would be required as part of the company's cost-cutting program and said the reductions would be ``significant.''

Rivet had also said he expected one-third of the restructuring charge to be in cash.

Rivet last week also reiterated the company's fourth-quarter revenue guidance for an increase of about 20 percent from the third quarter, paced by improvement in sales of flash memory chips, which are widely used in cell phones.

As a result of the job cuts and other actions, AMD expects earnings before interest, taxes, depreciation and amortization -- or EBITDA -- to turn positive in the first quarter and then increase through the year.

[arete]

More jobs lost to cost cutting.

Richard W.

[wideawake]

More fake jobs from the Clinton bubble finally going away.

Hopefully, some entrepreneur will soon find a use for these peoples' talents.

[SamAdams76]

You beat Willie Green to the punch.

[arete]

find a use for these peoples' talents.

Just what talent would that be?

Richard W.

[arete]

You beat Willie Green to the punch.

He must be taking a break.

Richard W.

[Hodar]

Oh, I dunno .... maybe applied semiconductor technology, BIOS software development, PC architecture, IC design, PCB layout, IC Fabrication, marketing, technical writing, legal counsel, patent law, logic design, verilog and IC simulation, power supply design, memory cell design, .... stuff like that. AMD has to design a processor and matching chipset that matches and exceeds Intel's chipsets in performance and price. Then, they have to perform EVERYTHING that an Intel chipset does; but may not infringe upon Intel patents. Fairly non-trivial stuff.

[fogarty]

In case you didn't know, Intel is laying off too. They just finished laying off 4000 worldwide (a big chunk from Oregon) and there is talk of more cuts.

There will be more layoffs into the 1st Quarter of next year. These engineers and technical employees are going to be hard pressed to find ANY job in the market right now.

[glc1173@aol.com]

Did AMD fire all of its H-1(b)s first?

By federal law, companies are to hire H-1(b)s only when no qualified American applicant is available.

So what if the company then downsizes - and gets rid of lots of American workers? Can it any longer claim that American applicants are "unavailable?"

The fastest way to create one job for one downsized American IT worker is to deport one H-1(b).

IMMIGRATION resource library: public-health facts, court decisions, local INS numbers!

[Hodar]

I was unaware of Intel doing downsizing as well. I was unfortunate enough to be downsized when I worked in the Dupont, WA plant. 10,000 to 1,200 in a year and a half. I find it interesting that according to this article:
http://www.theinquirer.net/?article=6252

Intel will be buying back a large number of outstanding shares. One would think that if you are cash flush as that, you dump your employees.

[arete]

Sorry, no can do. Our economy needs instant increases in population right now. Americans don't reproduce fast enough to keep the wheels from falling off the wagon. Immigrants also tend to have much larger families which spells more consumers and more housing and auto sales. You must look at the big picture.

Richard W.

[arete]

The only way many companies have to make money now is to cut costs and that means jobs. Share buybacks are generally all noise and smoke and mirrors especially in tech land since those shares are going to be used for deferred compensaion payments (options). It makes it look like companies are earning more than they really are or that they have money in the bank. Unfortunately, most of the earnings and money have already been spent.

Richard W.

[Hodar]

I tend to agree with you. The main issue I keep hitting, is that technology (ie. hardware) has hit a pace that is outstriding software. It used to be (70 - late 80's) that a PC was obsolete within 2 years. Now, with very few exceptions; there's no 'need' to upgrade a 300 MHz Pentium II box. Maybe some more memory for $20; but thats about it. Unless you are a serious 3D gamer, a 2-3 GigHz AMD/Intel processor is just not necessary.

The only relief to technology I see, is super complex games; such as the leaked DOOM III.

[fogarty]

Yep, and the corporate debt level is still a monster hiding in the closet for many companies. Companies are overleveraged, and up to their eyeballs in infrastructure and inventory they can't get rid of.

Even Defense Contractors are laying off people - in spite of the supposed kickstart the war on terror was supposed to bring.

That is why I repeat the same advice every time I post on the economy: If you are fortunate enough to still have a job, live your life like you're going to be unemployed next week. Thrift and saving should be watchwords for everyone.

[MonroeDNA]

Thanks, Willie.

[MonroeDNA]

Forgot the sarcasm tag! Sorry. :)

[wideawake]

Among these people there are engineers, marketing specialists, etc.

AMD is a real company, after all - not just some internet startup.

I wish them the best.