AMD lays off 100 more than expected
AMD laid off 600 employees in its Q4, 100 more than its previously announced job cut plans, and expects a $70 million charge on the cuts. AMD also expects charges for its ATI buy and investment in Spansion.
By Suzanne Deffree, Managing Editor, News -- EDN, December 30, 2008
AMD Inc laid off 600 employees in its Q4, 100 more than the 500 previously announced in November.
AMD originally commented on its planned job cuts just days before its annual analyst day.
The layoffs are part of AMD's effort to reduce the company's breakeven to $1.5 billion a quarter and follow a 1,650 employee reduction announced in April that saw approximately 10% of the MPU maker's staff let go. The move also comes after AMD announced in October that it would spin its manufacturing operations out into a separate company in an effort to reduce costs and debt and to also lower headcount by approximately 3,000.
As a result of the 600 headcount reduction, AMD expects Q4 restructuring expenses of approximately $70 million, $20 million more than the $50 million AMD had estimated for its previously expected 500 employee reduction.
Of the $70 million amount, approximately $34 million is related to severance and costs related to the continuation of certain employee benefits, approximately $13 million is related to contract or program termination costs, approximately $17 million is related to asset impairments, and approximately $6 million is related to exit costs for facility site consolidations and closures. Of the $70 million, approximately $45 million will result in cash expenditures in fiscal 2009, AMD reported in an SEC filing Monday.
AMD further said in the SEC filing that it has concluded its current carrying value of its goodwill, which the company had recorded as a result of its October 2006 acquisition of ATI Technologies Inc, was impaired. Such a statement was not unexpected. AMD in July announced charges on the acquisition, with many industry observers suggesting that AMD's $5.4 billion price for the GPU maker was too high.
AMD said it expects that the impairment charge will be material, but that, as of the filing, it was unable to estimate the amount or range of amounts of the impairment charge. In addition, the company said it will also perform an analysis to identify whether there is also potential impairment of any of the remaining identifiable intangible assets acquired in the ATI acquisition.
AMD also noted its investment in Spansion Inc in the filing, stating that it is required to mark its investment in the memory company to its current market price and record an impairment charge to the investment through earnings if the loss related to the change in market price is deemed to be other than temporary. For the fiscal quarter ended December 27, AMD will incur an other-than-temporary investment impairment charge of approximately $20 million related to its investment in Spansion, according to the filing.
AMD’s analysis is based on the changes in Spansion’s stock price during Q4. The closing price of Spansion’s common stock, SPSN, on December 26, the last trading day of fiscal 2008, was $0.22 per share, substantially lower than its 52-week high of $4.29.
The SEC filing also comes after AMD in early December slashed its Q4 revenue outlook by 25%. AMD's chief rival Intel Corp had similarly slashed its Q4 guidance in mid November.
-
worse than expected...
How could things be in the future!
AintMleD - 2009-4-1 21:02:00 PST -
I am a former Applied Materials employee here in Austin, they are also letting many folks go via "buyout packages", but it does not seem to be getting press coverage here. I started in 2000 and the company head count was advertised as 6000+ and one of the 100 best companies to work for. Now they have 2000ish employees and are, from what I am hearing, letting 40 to 50% go withing the next 7 months. To me that's news worth reporting.
Rick - 2008-31-12 19:28:00 PST
