Getting AMD back on its feet

— 1:30 AM on April 13, 2007

On Monday, AMD announced that its first quarter revenue would fall significantly short of expectations as a result of repeated price cuts and heated competition from Intel. Overall, AMD seems to be in a bit of a rough spot at the moment. To deal with the situation, the company said it planned to restructure its business model, cut capital expenditures, reduce discretionary expenses, and limit new hires.

The folks at ExtremeTech have now put up an article that takes a closer look at how AMD is likely to get back on its feet. According to the article, the consensus among analysts is that AMD's restructuring won't be drastic, and that the company "should find its way back to profitability later this year." The restructuring could involve work force reductions, although an analyst for Mercury Research told ExtremeTech that any cuts wouldn't be significant. Indeed, large cuts could hurt AMD's competitiveness. And besides, according to Jon Peddie of Jon Peddie Research, neither AMD nor ATI were "fat" when they merged last year, and there was little to no personnel overlap. "When they came together, they were expecting all these redundancies. Well, it happened, and guess what – they can't find any.

Instead of cutting a significant portion of its work force, ExtremeTech suggests that AMD may look at outsourcing to cut costs. A Merrill Lynch analyst quoted by the site also states, "We expect to see [AMD] in the market for additional financing shortly."

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