Sunnyvale (CA) –AMD announced that it laid off more people than previously anticipated in an effort to get closer to a breakeven point. The company also expects another impairment charge related to the $5.4 billion acquisition. There is no number yet, but the charge will be “material”. AMD took two impairment charges earlier this year, amounting to about $2.5 billion.
They say bringing in investors into a company can be beneficial, but it may come with a high price. In AMD’s case, that could be very well the case as there is yet another wave of bad financial news for AMD.
In an SEC filing, the company said that it cut 600 people from its staff during the current quarter, about 100 more than previously announced. The additional layoffs could be a reaction to the deteriorating economic environment, that has made it virtually impossible for the company to reach is breakeven point, which is believed to be somewhere in the $1.5 billion revenue (per quarter) neighborhood. The layoffs will cost the company about $70 million.
Industry sources suggested that the spin-off of its manufacturing unit as well as further business streamlining efforts will result in about 1400 to 1500 additional layoffs in 2009, which will reduce the headcount of the combined company to about 14,000 by the end of next year.
AMD’s stock has been trading at 18-year lows recently, giving the company a market capitalization of about $1.2 - $1.3 billion, which is about half of the ATI impairment charges AMD has taken so far ($1.6 billion in Q4 2007 and $880 million in Q2 2008; ATI was acquired by AMD for $5.4 billion in 2006.) AMD said it will take yet another “material” charge, because current market conditions are expected to negatively impact ATI products. Also, AMD’s overall reduced market capitalization cannot support a previously determined value of ATI, the firm said.
The company has not yet determined the amount of the impairment charge, but noted that it will disclose its decision within four days of “determining such an estimate or range of estimates.” The impairment charge will be reflected in AMD’s Q4 financial report.
Additionally, AMD will take an impairment charge related to its investment in its former flash memory unit Spansion. The change in Spansion’s stock price will cost AMD $20 million, which will also be included in the Q4 report, the company said.
It is unclear at this time how the declining stock value and yet another “material” impairment will affect AMD’s manufacturing spin-off and its deal with Advanced Technology Investment Company (ATIC) and Mubadala Development Company. AMD recently announced an adjustment to a previously announced agreement and it would be rather surprising if the two investors would not want to renegotiate the terms of the deal in the light of the current economic climate.
At least at this time, there are no announcements of new terms and it seems that AMD needs to close this deal rather sooner than later. As of September 27 of this year, AMD had $1.3 billion in cash.
They say bringing in investors into a company can be beneficial, but it may come with a high price. In AMD’s case, that could be very well the case as there is yet another wave of bad financial news for AMD.
In an SEC filing, the company said that it cut 600 people from its staff during the current quarter, about 100 more than previously announced. The additional layoffs could be a reaction to the deteriorating economic environment, that has made it virtually impossible for the company to reach is breakeven point, which is believed to be somewhere in the $1.5 billion revenue (per quarter) neighborhood. The layoffs will cost the company about $70 million.
Industry sources suggested that the spin-off of its manufacturing unit as well as further business streamlining efforts will result in about 1400 to 1500 additional layoffs in 2009, which will reduce the headcount of the combined company to about 14,000 by the end of next year.
AMD’s stock has been trading at 18-year lows recently, giving the company a market capitalization of about $1.2 - $1.3 billion, which is about half of the ATI impairment charges AMD has taken so far ($1.6 billion in Q4 2007 and $880 million in Q2 2008; ATI was acquired by AMD for $5.4 billion in 2006.) AMD said it will take yet another “material” charge, because current market conditions are expected to negatively impact ATI products. Also, AMD’s overall reduced market capitalization cannot support a previously determined value of ATI, the firm said.
The company has not yet determined the amount of the impairment charge, but noted that it will disclose its decision within four days of “determining such an estimate or range of estimates.” The impairment charge will be reflected in AMD’s Q4 financial report.
Additionally, AMD will take an impairment charge related to its investment in its former flash memory unit Spansion. The change in Spansion’s stock price will cost AMD $20 million, which will also be included in the Q4 report, the company said.
It is unclear at this time how the declining stock value and yet another “material” impairment will affect AMD’s manufacturing spin-off and its deal with Advanced Technology Investment Company (ATIC) and Mubadala Development Company. AMD recently announced an adjustment to a previously announced agreement and it would be rather surprising if the two investors would not want to renegotiate the terms of the deal in the light of the current economic climate.
At least at this time, there are no announcements of new terms and it seems that AMD needs to close this deal rather sooner than later. As of September 27 of this year, AMD had $1.3 billion in cash.