AMD to Cut Jobs Due to Decline in PC Sales

Chip manufacturer AMD announced that it would slash 15 percent of its workforce due to the declining PC sales that resulted in the reduction of its revenues. The company said that the cuts were necessary and expected to be completed by the end of 2012.
 AMD

The job cuts would save AMD around $20 million in the fourth quarter and $190 million in 2013. The announcement came along with the release of the company’s third quarter earnings. It showed sales dropped 25 percent compared to the same period last year.

According to CEO Rory Read, the PC industry has gone through a period of significant change that has impacted both the ecosystem and the company. He added that the shift happened at a much faster pace than the company has anticipated.

Research firm HIS iSuppli said that shipments of personal computers are likely to drop this year for the first time since the dot-com bust of 2001.

Read said that decreasing AMD’s workforce is hard but necessary step to take advantage of the eventual market recovery. Job cuts were needed to capitalize on growth opportunities for the company’s products outside the traditional PC market.

As of February of this year, AMD employed 11,705 people. Its shares dropped 14 percent last week after it released a warning with regards to its third quarter revenue. Last Thursday, shares were down 0.4 percent in after-hours trading.

AMD’s rival Intel also announced declining sales and profits in the third quarter. The weak global economy as well as the shift to tablets resulted to low PC demands. This led to the 8 percent drop in sales for the company.

For the current quarter, Intel doesn’t expect conditions to improve. It anticipates PC sales to grow at half of the normal seasonal rate. Most computer makers decrease their inventories as the global slump continues.