AMD sheds 1100 jobs, cuts pay
AMD's top execs will take a 20% salary reduction and more jobs will be slashed as the MPU maker continues to cut costs in the harsh economy.
By Suzanne Deffree, Managing Editor, News -- EDN, January 16, 2009
AMD will cut 1100 jobs in the current quarter and temporarily cut pay as it struggles to stay afloat in these rough economic waters.
Of the 1100 layoffs, 200 will come as a combination of attrition and as part of the company's planned divestiture of its handheld division.
The workforce reduction follows an approximate 3% headcount cut announced in November 2008 and a 10% cut announced in April, both part of a larger effort to reduce AMD's breakeven to $1.5 billion a quarter. In total, more than 2200 employees were affected by the two rounds of layoffs.
As to the pay cuts, Executive Chairman Hector Ruiz and CEO Dirk Meyer will be taking a temporary reduction of 20% in base salary. In AMD's US and Canadian operations, the company said it will enforce salary reductions of 15% for managers with titles of VP and above, 10% for all other employees who are not eligible for overtime pay, and a 5% cut to overtime pay.
Outside North America, AMD will implement voluntary pay reduction measures, consistent with local policies and regulations.
AMD will further temporarily suspend matching contributions to its employee retirement savings plans.
AMD is far from alone in taking such cost-savings actions. Motorola, for one, announced this week it would shed another 4000 jobs after announcing its top executives would take significant pay cuts and reducing employee benefit compensation, such as 401K contributions, in December.
The news comes today as AMD estimated a $622 million charge related to its $5.4 billion ATI buy, made in 2006. The charge was expected. AMD announced in late 2008 such a charge would be coming, but at the time said it could not estimate its cost.
The news also comes after Intel Thursday reported one of its worst Q4s in recent history on weak chip demand and recorded sales down 20% from Q3. Analysts have questioned why Intel also has not announced job cuts.
AMD is slated to report on its Q4 on Thursday.
Wall Street did not take kindly to the news, sending AMD's stock down in morning and afternoon trading. After climbing to the day's high of $2.40 at 10:36am, the stock dropped to $2.24 by 3:13pm as reports of the cost-cutting measures spread. The stock closed at $2.26 on Thursday.
