updated 12:02 am EDT, Sun October 14, 2012
Dismal quarterly results likely to blame; no rapid recovery expected
According to sources familiar with the matter, chip manufacturer Advanced Micro Devices (AMD) plans to cut as many as 2,340 jobs. The firings are expected to be announced as soon as next week, and are reported to come from employees in the engineering and sales departments of the chip designer.
Wedbush Securities analyst believes that "with PC demand being so weak, we don't think the company has any choice but to do some considerable cost-cutting measures." Rumored cuts of between 10 and 30 percent are "aligned with what we were hearing from our industry checks as well."
AMD's third quarter reports were sub-par, which are the likely source of the layoffs. It announced that its revenue would drop about 10 percent year-over-quarter, as opposed to a decrease of four percent to a gain of two percent as predicted. AMD's numbers are blamed on a failure to produce enough chips to meet demand for some time in 2011, as well as an overall weak economy.
Bernstein analyst Stacy Rasgon compared AMD's decline as "watching a slow-motion train wreck." He added that "AMD remains a fundamentally risky choice in our view, and given several ugly quarters, shares are likely to be dead money for some time."