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AMD to restructure, reduces headcount and capital spending
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Friday, November 8, 2002
In response to mounting losses and competitive pressures from Intel Corp., troubled Advanced Micro Devices Inc. here plans to reduce its work force, cut capital spending, and take a charge of "several hundred million dollars" in the fourth quarter, according to a report from Reuters.
Reports have also surfaced that AMD must cut 10%-20% of its 13,187-person work force in order to break even.
No other details were given about the job cuts, but AMD CFO Robert Rivet during a conference today said the company's capital spending budget is expected to be about $650 million in 2003, down from $750-to-$800 million in 2002, according to Reuters.
Rivet said he expects the company to reduce its expenses by more than $350 million in 2003, according to the report.
"We are accelerating our strategy to reset our business model and lower our corporate breakeven point,” added Hector Ruiz, president and CEO, in a statement issued by AMD today. “We have already begun implementing aggressive actions in the fourth quarter that are expected to significantly reduce our quarterly breakeven point in 2003. An associated pre-tax charge of several hundred million dollars will be taken in the fourth quarter," he said.
On a positive note, Ruiz confirmed the company's sales are expected to increase by 20% or more in the fourth quarter of 2002, compared to the third quarter ended Sept. 29.
"Based on anticipated seasonal patterns, the benefits of a better balanced inventory in the supply chain, and expected significant flash memory sales improvement, we currently anticipate a sales increase of approximately 20% or more in the fourth quarter compared to the third quarter," he said in a statement.
Hit hard by a slowdown in its core processor business, AMD reported sales of $508.2 million for the third quarter of 2002, down 34% from $765.9 million in the third quarter of 2001 and by 15% from $600.3 million in the previous period.
The Sunnyvale-based company also reported a net loss of $254.2 million, or minus $0.74 a share, compared to a loss of $97.4 million, or minus $0.28, a year ago. In the previous quarter, it reported a loss of $184.9 million, or minus $0.54 a share.
By: DocMemory
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