AMD shaves 1,400 jobs

Advanced Micro Devices Inc. (AMD) has set in motion a cost-cutting plan that will lay off 10 percent of the company's workforce. A source at AMD said half of the job cuts would affect the company's North American operations, where about 50 percent of the firm's workforce is located. AMD said the cuts would "occur across all functions globally," and were necessary in order to "re-balance the workforce skill set."

The firm said it plans to implement a "more competitive cost structure" by reducing operating expenses by about $200 million next year, $118 million of which will come from layoffs and $90 million of which will come from other initiatives set to streamline the business. AMD did not detail what those initiatives might be, but said they were a "broad set of process transformation activities within the company across finance, marketing and other groups."

"Think of things like how we handle internal PO approval/routing, etc.," an AMD spokesperson said. The spokesperson also pointed to AMD CFO Thomas Seifert's comments during the company's earnings call where he mentioned steps that would be taken to streamline business and decision-making processes across AMD's operations, R&D and go-to-market functions.

"We are in full executional deployment across each of the key work streams," Seifert stated. "These efforts are aimed at accelerating our transformation to a world-class design company growing revenue, lowering costs and reducing time-to-market. We expect to see material benefits from this project in 2012."

"This is CEO Rory Read putting his stamp on the company and clearing house," said In-Stat analyst Jim McGregor, saying the move was "probably long overdue."

AMD was hiring through the whole of last year, said McGregor, adding that this was certainly the time to be taking a long hard look at the company's various business units and seeing what had been successful and what had not. "Every now and then it's good for a company to clean house and to eliminate instances of duplication left over from the hiring of previous executives," McGregor said, positing that those executives "with a C in their title" may be those most at risk of being purged.

A source at AMD explained that this meant the firm would be looking to make cuts in some areas in order to re-hire engineers and staff in areas of larger growth opportunity. These areas include low power, emerging markets and the cloud. "This is primarily about looking at our global workforce and determining what incremental skills we need to pursue new growth opportunities in these key areas," said an AMD spokesperson. "Do we have sales/marketing folks in appropriate geographies, etc? If not, we need to get the right people."