AMD to reverse pay cuts

Actually were temporary

The employees at chip designer and seller AMD got some good news in their email this week: they are getting a raise.

Sort of. According to the Austin American-Statesman, the local paper in AMD's Texas hometown, new chief executive officer Dirk Meyer is getting ready to rescind the pay cuts that AMD instituted in January, when the economic meltdown was roaring.

Back then, AMD fired 1,100 workers to slash its costs, about nine per cent of its employees prior to the spinout of its chip making business to GlobalFoundries. The layoffs only affected the AMD side of the house, not the 3,000 employees who in March started getting their paychecks from GlobalFoundries. The company also said it was instituting "temporary" pay cuts, with the top brass getting a 20 per cent pay cut and managers with a VP or higher rank taking a 15 per cent hit to their salary. Other workers got a chop of between 5 and 10 per cent.

In December, AMD will reverse these pay cuts, which means they were in fact, temporary. There is no indication that AMD will rehire employees.

"Neither the economy nor our business has made a full recovery," Meyer told employees in an email, according to the American-Statesman. "We ask you to continue your tight rein on controllable spending, such as travel, catering and outside services."

Meyer added that AMD was "optimistic" about being profitable as it exits the year.

It is hard to imagine why. While the chip business is recovering somewhat, and the PCs and servers no doubt benefit from the competition that AMD's products give to Intel and other chip suppliers, AMD has shown an astonishing ability to lose money. If you add up 2006 through 2008, AMD had $17.3bn in sales, but it lost $6.64bn. This year, taking into account the GlobalFoundries spinout, AMD has booked $2.36bn in revenues, but has lost $718m.

It's a wonder why AMD didn't keep the pay cuts in place and let it drop to the bottom line until the company had a few quarters of profits under its belt. ®