You know that executive exodus we talked about this morning? Yeah, it's not a rumor anymore, and it's quite a bit bigger than we thought. AMD is actually planning a wide-ranging restructuring effort that will see it shed 10% of its work force, with layoffs beginning this quarter and continuing into 2012.
AMD claims the mass firings—sorry, the "restructuring plan and implementation of operational efficiency initiatives"—will help it become more competitive and "rebalance the company's global workforce skillsets." More important, AMD expects the restructuring to save about $200 million next year. Here are the details straight from the horse's mouth:
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 chipmaker says it plans to reinvest a "significant portion" of the money saved into "strategies for lower power, emerging markets, and the cloud."
AMD is still turning a profit, but it's in a tough competitive position. It hasn't put up much of a fight against ARM in the booming handheld market, and its latest desktop and mobile CPUs have failed to catch up to Intel's offerings in most respects, integrated graphics excepted. Recent 32-nm manufacturing issues at GlobalFoundries haven't helped. Meanwhile, Intel continues to post record quarter after record quarter and to execute almost flawlessly on its roadmap. AMD may have to fight harder than ever to stay relevant over the next few years.