AMD to Cut 10% Workforce - Analyst Blog
November 07 2011 - 10:15AM
Zacks
Advanced Micro Devices Inc.(AMD) plans to
eliminate 10% of its workforce or about 1,400 jobs in order to
reduce operational costs. This layoff is an attempt by AMD to
optimize its cost structure and thereby improve its
competitiveness.
The workforce reduction is expected to be over by the first
quarter of 2012 and will be conducted globally across all its
divisions. Along with other unspecified operational changes, the
layoffs are expected to save $200 million in 2012.
Management is looking to reinvest some of the savings into newer
business areas, including chips for devices such as tablet-style
computers in emerging markets and Internet-related opportunities
(mainly cloud computing).
Advanced Micro has been suffering from the slowdown in the
global PC market plus the delay in important new chips due to
manufacturing hiccups this year. The company’s third-quarter sales
of $1.69 billion missed its guidance of a 10% sequential increase
after Globalfoundries Inc. couldn't supply enough of Advanced
Micro’s new laptop chips to meet demand.
Most of Advanced Micro’s business is in chips for PCs that don’t
have a meaningful presence in smartphones and tablets. We believe
that the weak computer market and the company’s failure to
penetrate the new mobile device market have forced it to refine its
cost structure.
The rise of mobile devices, meanwhile, is benefiting chip makers
such as Qualcomm Inc. (QCOM) and Texas
Instruments Inc. (TXN), processors of which are designed
to consume less power.
After a weak second quarter, Advanced Micro made a modest
comeback in the third quarter, with earnings of 13 cents a share
beating the Zacks Consensus Estimate by 3 cents. Worldwide PC sales
have been stagnant, while smartphones, tablets, and other mobile
devices experienced strong growth. In order to stay ahead of its
rivals like Intel Corp. (INTC) and NVIDIA
Corp(NVDA), we believe Advanced Micro would need to enter
these emerging markets.
Advanced Microshares currently carry a Zacks Rank of #3,
implying a Hold recommendation in the short term (1–3 months).
ADV MICRO DEV (AMD): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
NVIDIA CORP (NVDA): Free Stock Analysis Report
QUALCOMM INC (QCOM): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
Zacks Investment Research
Texas Instruments (NASDAQ:TXN)
Historical Stock Chart
From May 2024 to Jun 2024
Texas Instruments (NASDAQ:TXN)
Historical Stock Chart
From Jun 2023 to Jun 2024