Advanced Micro Devices announced Monday that it will lay off 10 percent of its workforce by the end of September. The company made the announcement in a pre-earnings release that warned first-quarter revenue will drop 15 percent from a year ago.
AMD is scheduled to release its quarterly earnings on April 17. CEO Hector Ruiz is likely to face a rough time that day as he explains the weak results to investors and analysts.
In its statement, AMD admitted, “The decrease is due to lower than expected sales across all business segments.” The cuts amount to 1,650 jobs, 10 percent of AMD’s 16,500 global workforce.
AMD said sales for the first quarter were $1.5 billion, a 15 percent drop from the year-ago period. Analysts had been expecting sales of $1.61 billion, so the pre-earnings release was a bad surprise for Wall Street and sent AMD shares down 2.85 percent Tuesday morning to just over $6 a share.
Tuesday was also a bad day for AMD archrival Intel, whose shares were down 2.3 percent to $21.25 Tuesday morning. Two years ago it was Intel who was cutting jobs and restructuring. In 2006, Intel cut 10 percent of its workforce to save $3 billion a year.
So are AMD’s layoffs a sign of a turnaround — or a desperate move? AMD has suffered delays releasing its Opteron chip and has been eclipsed by Intel in moving to 45-nanometer technology. And AMD has had difficulty digesting its $5.6 billion acquisition of graphics chipmaker ATI, which AMD said has lost some 30 percent of its value since it was purchased.
AMD had been making some gains with sales for PCs and laptops, Charles King, principal analyst with Pund-IT, said in a telephone interview. “Unfortunately, their products in PCs and laptops are aimed more at consumers,”…