AMD warns as it seeks to cut workforce

Advanced Micro Devices, the second largest microprocessor maker behind Intel, on Monday issued a sales warning and announced plans to cut its workforce by 10 per cent.

AMD said it expected revenues for the quarter just ended to be about $1.5bn, down 15 per cent on the fourth quarter. It had predicted a seasonal fall of 5 to 10 per cent during its fourth-quarter earnings call, but it said there had been lower than expected sales across all of its businesses.

The company has about 16,500 employees, meaning some 1,650 jobs will be cut by the end of the third quarter. AMD said it expected to record a restructuring charge in the second quarter, but had not been able to finalise the details yet.

AMD shares fell 5 per cent to $6 on the news in extended trading in New York. It shares have fallen 15 per cent so far this year and are down 50 per cent over the past 12 months as losses have mounted in the face of brutal competition with its rival Intel.

AMD has reported five consecutive quarterly losses but has said it plans a return to profitability in the second half, powered by the release of new microprocessors and graphics chips.

The Silicon Valley company has recently introduced a range of processor and graphics products.

However, its comments that sales have been lower than expected across all product ranges suggests either the products have not matched those of rivals on price or performance or that AMD is beginning to suffer from a larger economic downturn.

The Semiconductor Industry Association reported last week that global semiconductor sales fell seasonally in February, down 5 per cent compared with the previous month.

AMD will report its first-quarter earnings on April 17.