AMD to cut workforce by 10 percent, invest savings in emerging markets and the cloud
After hitting a speed bump Q2 and making a modest bounce back in Q3, AMD doesn't seem to want to take any chances with Q4: the CPU firm just announced it's optimizing its cost structure to "enhance competitiveness and accelerate growth." In a press release, the outfit stated that it expects to save $10 million in the fourth quarter by cutting its global workforce by 10 percent and killing off a few contractual commitments. AMD says that the workforce reduction is global, and reaches all divisions of the company -- giving employees everywhere an excuse to rattle their boots. Combined with an efficiency heavy restructuring plan, the outfit predicts that the employee reduction will save more than $200 million in operational savings in 2012. AMD says it plans to reinvest a significant helping of the savings in projects targeting lower power, emerging markets and the cloud. Hit the press release after the break for official numbers and restructuring riffraff.
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AMD Optimizes Cost Structure to Enhance Competitiveness and Accelerate Growth
Operational savings of more than $200 million in 2012 designed to accelerate future growth in lower power, emerging markets and the cloud
SUNNYVALE, Calif. -11/3/2011
AMD (NYSE: AMD) today announced a restructuring plan and implementation of operational efficiency initiatives designed to strengthen the company's competitive positioning. AMD expects that these combined actions will create a more competitive cost structure and rebalance the company's global workforce skillsets, helping AMD to continue delivering industry-leading products while improving productivity, reducing time-to-market and better aligning with key industry trends that are expected to drive growth.
"Reducing our cost structure and focusing our global workforce on key growth opportunities will strengthen AMD's competitiveness and allow us to aggressively pursue a balanced set of strategic activities designed to accelerate future growth," said Rory Read, AMD president and CEO. "The actions we are taking are designed to improve our ability to consistently address the needs of our global customer base and stake leadership positions in lower power, emerging markets and the cloud."
AMD expects that the restructuring plan will result operational savings, primarily in operating expense, of approximately $10 million in the fourth quarter of 2011 and $118 million in 2012, primarily through a reduction of its global workforce by approximately 10% and the termination of existing contractual commitments. The workforce reduction will occur across all functions globally and is expected to be substantially completed by the end of the first quarter of 2012. Based on anticipated savings from the restructuring plan, AMD expects fourth quarter 2011 operating expenses will be approximately $610 million.
As a result of implementing efficiencies across the company's operations, AMD expects to save approximately $90 million in 2012 operating expenses in addition to the restructuring plan savings, resulting in more than $200 million of expected combined operational savings in 2012.
The company expects to reinvest a significant portion of the savings to fund initiatives designed to accelerate AMD's strategies for lower power, emerging markets, and the cloud.
The company's actions pursuant to the restructuring plan will take place primarily during fourth quarter of 2011, with some restructuring plan activities extending into 2012. The company currently estimates that it will record restructuring expense in the fourth quarter of 2011 and in 2012 of approximately $101 million and $4 million, respectively. Of the total restructuring expense, approximately $56 million will be future cash expenditures in 2011, $33 million will be future cash expenditures in 2012 and $15 million will be future cash expenditures in 2013.
