AMD CEO: We're jumping back into cost-cutting mode

But don't worry – our channel enjoyed a 'sequential increase'

AMD has confirmed it is slipping back into cost-cutting mode after its annus horribilis, caused by tanking demand for consumer PCs in a quarter described by CEO Lisa Su as the “revenue trough” for 2015.

As the headline figures revealed last night, there was little to cheer up AMD or investors; revenue dropped eight per cent sequentially to $942m, or 34.6 per cent lower than the same period a year ago.

The Computing and Graphic unit fell 54.2 per cent year-on-year to $379m and the unit reported an operating loss of $147m, compared with a loss of $6m.

“We believe the second quarter will be our revenue trough for the year,” said Su on a conference call, “based on stronger second half demand for games consoles, combined with the ramp up of our newest APU and GPU products, and OEM demand improving as the market transitions to Windows 10.”

“That said, the PC market remains volatile. We must further align our cost structure with our revenue profile, as we focus on our strongest market opportunities and continue investing in high performance computing and graphics technologies,” she added.

The guidance for Q3 operating expenses has been lowered from $353m to $340m, and will likely be reduced further.

“The goal is to return to profitability. I think there's no question about that, and we will take active actions, on both the top line and the bottom line,” said Su.

The CEO stopped short of confirming more job cuts – AMD is still “assessing” the actions to take. But reducing the headcount is typically part of a tech vendor’s thinking when it refers to chucking expenses overboard.

The one area AMD highlighted as positive was “the channel” where it enjoyed a “sequential increase” in desktop processor revenues on the back of demand for its FX processors and A-series APUs.

“We also reduced downstream inventory levels in the quarter, largely completing our multi-quarter channel rebalancing effort,” said Su.

Great, eh? Not really. As we exclusively revealed some months back, AMD halted all new shipments of product into the channel in Q1 due to an inventory bottleneck created as customers pulled back the demand throttle, so a quarter-on-quarter rise is nothing to write home about.

Channel people and analysts remain concerned about the future of AMD, and told us the company need to conjure up some magic or risk becoming even more marginalised.

Those concerns will also be applicable to the workforce, and a bunch of AMD people will no doubt be sitting less comfortably today after Su’s announcement on spending cuts. ®

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