AMD Sees Decline in Computing and Graphics Segment, Readies for Round of Layoffs

[[Coi] Mr.CLuBBeR]

Santa Clara chip designer plans to reduce headcount by 7 percent

AMD's revenue for its fiscal third quarter of 2014 was flat sequentially and down 2 percent year-over-year at $1.43 billion, though the company still eeked out a $17 million profit, or $0.02 per share, along with operating income of $63 million. However, AMD's Computing and Graphics segment -- desktop and notebook processors and chipsets, discrete GPUs and professional graphics -- took a 6 percent sequential hit and declined 16 percent year-over-year.
"AMD's third quarter financial performance reflects progress in diversifying our business," said Dr. Lisa Su, AMD president and CEO. "Our Enterprise, Embedded and Semi-Custom segment results were strong; however, performance in our Computing and Graphics segment was mixed based on challenging market conditions that require us to take further steps to evolve and strengthen the financial performance of this business. Our top priority is to deliver leadership technologies and products as we continue to transform AMD."
Part of Dr. Su's restructuring plan for AMD includes laying off 7 percent of the company's workforce, most of which will be completed by the end of the year. This will result in a restructuring and impairment charge of around $57 million next quarter, primarily related to severance packages, and a restructuring charge of around $13 million in the first half of next year that will be mostly related to real estate actions.
"While decisions that impact the size of our global team are never entered into lightly, this is the right step to ensure we prioritize our resources and engineering investments in our highest-priority opportunities that can drive improved profitability and long-term growth," said Dr. Su.
Heading into next quarter, AMD expects revenue to decrease 13 percent sequentially, plus or minus 3 percent.
News of AMD's rough quarter, impending layoffs, and expected decrease in revenue next quarter prompted investors to hit the sell button. Shares of AMD tumbled more than 8 percent to $2.42 in after hours trading before recovering slightly to $2.64 today.
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