AMD has unveiled a belt-tightening plan that the struggling chipmaker hopes will get its finances back on track to profitability.
We were told to expect changes after AMD's latest dispiriting earnings report in July, although no specifics were offered at the time.
You needn't have been a fortune teller to predict that heads would roll, though. AMD has already shrunk its workforce by 8 per cent over the last year, and on Thursday it confirmed that there's more to come.
In a filing with the US Securities and Exchange Commission, AMD says it plans to give the axe to another 5 per cent of its approximately 9,700 employees, with most of those layoffs being completed by the end of fiscal 2016.
It's also planning to consolidate some of its real estate holdings, although it didn't say where or how many buildings would be involved.
The company told US regulators that it expects to take restructuring and asset impairment charges of about $42m as a result of these moves, the majority of which will be recorded in the third quarter of its fiscal 2015. AMD is expected to announce its results for that quarter this month, although it has yet to set a date.
Approximately $31m of these charges – or 73.8 per cent of the total – are expected to come from severance and benefit payouts.
As a result of the restructuring, AMD says it expects to save $2m in the third quarter of its fiscal 2015 and $7m in the fourth quarter. It then expects to save another $58m in expenses across all of fiscal 2016.
It's going to take a lot more than these measures to drag AMD back into the black, though. It lost $181m in its most recently reported quarter, which ended on June 27, and it lost another $180m during the three months before that.
The chipmaker has a few ideas. It's streamlining its sales structure, outsourcing its IT and application development, and it plans to name new regional presidents for Europe and China.
Much, though, will depend on how AMD fared in its most recent quarter. If this one looked anything like the last two, this somewhat unambitious restructuring plan could be too little, too late.
Investors seemed cautiously optimistic on Thursday, with AMD's share price creeping up slightly in after-hours trading on the news. ®