14 DAY TRIAL // Advanced Micro Devices' president and chief operating officer Dirk Meyer has sent an e-mail message to the company's employees that justifies the upcoming layoffs rumored last month. It seems that the company is gearing up for the gloomy Q1 revenue announcements.
Dirk Meyer said that the job slashing is "painful", but it is the last resort to set AMD back on track, given the fact that it has been unable to increase its revenues to match the expectations. At the moment, the current number of employees do not justify the company's expenses.
"As Hector and I have said, headcount reductions are among the last actions we would undertake to help AMD recover and achieve our objectives," Dirk Meyer wrote in the message. "The unfortunate truth is that we have been unable to grow our revenues to justify our cost structure, and the uncertain environment requires us to adjust our cost structure to match lowered revenue expectations."
The chip manufacturer will cut almost 10 percent of its total workforce, starting mid-April. The restructuring process will have to be completed until the end of the third quarter of this year, and will affect all the 17,000 people across AMD's board.
AMD will perform a thorough selection of the persons to lose their jobs, based on "a review of employee performance, skill requirements and functional needs." Meyer also claims that the company will try to perform better during the second quarter, and head back to "consistent profitability".
However, market analysts don't quite agree with the statement. The company's stock is dangerously low, and is situated just above $6, down from the mid-$20s a year ago, and more than $40 two years ago. Ashok Kumar, an analyst at CRT Capital Group, said earlier this week that AMD has to either improve its performance, or to split in two.
AMD could undergo important transformations, that would split the company into a manufacturing concern and a design company, following Asustek's model earlier this year. "They don't have too many options with the debt overhang (from the ATI acquisition)," he said.