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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: kash johal who wrote (52279)	3/10/1999 2:47:00 PM
From: Yougang Xiao	Read Replies (1) \| Respond to of 1577188

Interesting Piece from EBN: AMD's fab woes force 1Q loss, job cuts By Mark Hachman Electronic Buyers' News (03/09/99, 05:13:55 PM EDT) Advanced Micro Devices preannounced a significant loss for the current quarter, exacerbated by a persistent manufacturing flaw that will force the company to lay off as many as 300 employees in an effort to cut costs. Sunnyvale, Calif.-based AMD announced the moves Monday as part of a restructuring program that will be further detailed on April 6, when the company reports its first quarter earnings. (If the formal restructuing comes on the earning report date, would it be considered as an act of desperation? In other words, any better timing to announce the complete restructuring program other than Q1 report date?) Analysts and an AMD spokesman indicated that the lay offs were designed to continue lowering operating costs by streamlining product areas, (sounds like the street like the restructuring idea/) with an emphasis on the company's microprocessors and communications devices. AMD's shortfall is an unexpected sidebar to earlier manufacturing troubles, which cut into the company's earnings during the fourth quarter. The same flaw that restricted AMD's K6-2 microprocessors from achieving 400- and 450-MHz speeds was also found to have reduced the numbers of functioning processors the chipmaker was able to produce, according to a company spokesman. "It's the same problem, but it continues to affect frequency distribution and now the unit output as well," the spokesman said. AMD had anticipated a small downturn in unit output as it began to manufacture its new K6-III and K7 microprocessors, both of which consume a larger die area. The AMD spokesman said the manufacturing glitch has since been fixed, and the company anticipates normal yields for its wafers going forward. However, for the first quarter, AMD earlier had projected that it would manufacture "substantially" more than 5.5 million processors. Because of the flaw, the company now says it will be able to make a maximum of 5 million units. Analysts took the shortfall in stride. "It's not terribly surprising," said Charles Boucher, an analyst with Donaldson, Lufkin and Jenrette, San Francisco. "It's a continuation of the same problem." During the second quarter, production output should increase, as the fixed wafers begin to be packaged and sold. AMD predicts that at least 5 million processors will ship during that time, a minimum target that will be bolstered as AMD devotes more resources to the product line. During the fourth quarter of 1998, two-thirds of the company's $788.8 million in revenue resulted from sales of microprocessors. AMD said it will cut a maximum of 100 jobs during the remainder of its first quarter, eliminating an additional 200 positions during the second quarter. Costs of the work force reductions will be recorded against AMD's first- and second-quarter earnings, the company said. Redundant positions may be eliminated as AMD consolidates its business groups, according to a spokesman. AMD currently employs 13,800 people. In a statement, chairman and chief executive W.J. "Jerry" Sanders III said the upcoming restructuring is aimed at increasing the company's focus on microprocessors and other devices that enhance the value of PCs, where the company can grow its profits. These areas include "circuits that provide improved connectivity, a superior visual computing platform, and better access to the Internet from personal computers," Sanders said. The spokesman declined to comment on whether Sanders' statement was meant to suggest that AMD would trim some its business units. When asked for clarification, the spokesman said that AMD's Vantis subsidiary, a struggling business unit that makes programmable logic ICs, will be unaffected by the moves. In addition, he noted that demand for AMD's flash products has grown stronger, and that customers are becoming more worried about availability than price. "Flash [memory] continues to be an important business for us," the spokesman said. (So no group gets cut? Then why alluding to a big restructuring? A very muddy picture on the restructuring at the moment!) ebnews.com