Chipmaker Applied Micro Devices (AMD) announced today it will be laying off 10 percent of its global staff, in addition to all of its contractors, as a part of a “restructuring” plan. If recent staffing numbers are correct, that’s about 1200 jobs.
“The actions we are taking are designed to improve our ability to consistently address the needs of our global customer base and stake leadership positions in lower power, emerging markets and the cloud,” said AMD president and chief executive Rory Read in a statement.
According to a study by IHS iSuppli, the semiconductor industry took a hit in the second quarter, and revenues for the third quarter aren’t looking good. The analyst firm is lowering overall 2011 revenue growth projections to 2.9 percent, down from its original projection of 4.6 percent. This is a major leap from the 32.4 percent projected growth that occurred in 2010. With such low projections and an overall waning market, Read is moving to keep his company relevant, or at least above water.
The company hopes to see a savings of $10 million dollars in operating expenses for the fourth quarter of 2011, and expects that operating costs will amount to $610 million for the same quarter. This, an overall savings of $118 million in 2012, and other efficiency changes will bring the company to a hoped-for $200 million in savings. The layoffs will play a big part it achieving this goal, are to affect employees globally, and should be completed by the end of the first quarter in 2012.
The company will take action on this plan in the current quarter. Executing the plan will cost roughly $105 million between this quarter’s action and next.
Check out the press release here:
AMD Optimizes Cost Structure to Enhance Competitiveness and Accelerate Growth
− Operational savings of more than $200 million in 2012 designed to accelerate future growth in lower power, emerging markets and the cloud –
SUNNYVALE, Calif. — Nov. 3, 2011 — AMD (NYSE: AMD) today announced a restructuring plan and implementation of operational efficiency initiatives designed to strengthen the company’s competitive positioning. AMD expects that these combined actions will create a more competitive cost structure and rebalance the company’s global workforce skillsets, helping AMD to continue delivering industry-leading products while improving productivity, reducing time-to-market and better aligning with key industry trends that are expected to drive growth.
“Reducing our cost structure and focusing our global workforce on key growth opportunities will strengthen AMD’s competitiveness and allow us to aggressively pursue a balanced set of strategic activities designed to accelerate future growth,” said Rory Read, AMD president and CEO. “The actions we are taking are designed to improve our ability to consistently address the needs of our global customer base and stake leadership positions in lower power, emerging markets and the cloud.”
AMD expects that the restructuring plan will result operational savings, primarily in operating expense, of approximately $10 million in the fourth quarter of 2011 and $118 million in 2012, primarily through a reduction of its global workforce by approximately 10% and the termination of existing contractual commitments. The workforce reduction will occur across all functions globally and is expected to be substantially completed by the end of the first quarter of 2012. Based on anticipated savings from the restructuring plan, AMD expects fourth quarter 2011 operating expenses will be approximately $610 million.
As a result of implementing efficiencies across the company’s operations, AMD expects to save approximately $90 million in 2012 operating expenses in addition to the restructuring plan savings, resulting in more than $200 million of expected combined operational savings in 2012.
The company expects to reinvest a significant portion of the savings to fund initiatives designed to accelerate AMD’s strategies for lower power, emerging markets, and the cloud.
The company’s actions pursuant to the restructuring plan will take place primarily during fourth quarter of 2011, with some restructuring plan activities extending into 2012. The company currently estimates that it will record restructuring expense in the fourth quarter of 2011 and in 2012 of approximately $101 million and $4 million, respectively. Of the total restructuring expense, approximately $56 million will be future cash expenditures in 2011, $33 million will be future cash expenditures in 2012 and $15 million will be future cash expenditures in 2013.