AMD lowers Q1 sales forecast, restructures business model
By Colleen Taylor, Contributing Editor -- EDN, April 9, 2007
Advanced Micro Devices Inc. (AMD) today lowered its Q1 revenue estimates and announced a restructuring plan that will see 2007 capital expenditures reduced.
The Sunnyvale, Calif.-based MPU maker now expects to report Q1 revenue of approximately $1.225 billion, down significantly from the $1.6 billion to $1.7 billion in Q1 revenues the company had forecast in January. AMD followed similar patterns with its Q4 2006 earnings, warning of a slump in financial results days before the quarter’s numbers were released.
Q4’s down numbers were a result of AMD’s $5.4 billion ATI acquisition, which closed in October. Today’s revised outlook, according to the chipmaker, comes after Q1 revenues declined sharply quarter-over-quarter for the computing solutions segment, primarily due to lower overall average selling prices and significantly lower unit sales, especially in the resale channel.
To fight back against the sales slips, AMD said it plans to restructure its business model aiming to increase operational efficiencies and lower its operating cost structure. AMD said it will reduce 2007 capital expenditures by approximately $500 million, which the company believes will not materially impact capacity plans for the year. AMD also said it plans to significantly reduce discretionary expenses and limit hiring to critical positions.
AMD gave no further details of the restructuring, but said it would do so during its Q1 conference call on April 19.
