AMD Lessens PC Presence by up to 50% to Recover from Losses
The tumultuous PC landscape has not been very kind to AMD in recent years, and increased pressure to remain afloat has forced CEO Rory Read to make some drastic measures. "The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD." Apparently AMD has underestimated critical factors that have been identified as industry game changers, which have now advanced its influence at a faster pace. "As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model. Our restructuring efforts are designed to simplify our product development cycles, reduce our breakeven point and enable us to fund differentiated product roadmaps and strategic breakaway opportunities."
Read's restructuring initiative was to trim the company workforce, and AMD's original 2011 headcount of 11,737 is now down to less than 10,000, resulting in an expected $190 million annual savings. To put things in perspective, AMD's $1.3 billion cash is depleting rapidly considering that months ago it was $1.58 billion. Read asserts that AMD's problem lies with increased tablet sales and diminished sales in the lower end PC segment, along with the doubts in Windows 8's capacity to generate long-term interest in the platform. As such, the solution according to the CEO is to distance the company from these issues. This means that AMD will now be focusing only 40 to 50 percent of its resources to PCs, and the other half allocated to AMD server CPUs, custom solution CPUs, a segment in customized gaming APUs, as well as APUs for the ultramobile market. If the strategy pans out, Read estimates AMD to recover by Q3 2013.