Arik Hesseldahl

Recent Posts by Arik Hesseldahl

AMD to Cut Up to 30 Percent of Workforce

Days after warning of a huge sales and earnings miss, chipmaker Advanced Micro Devices is close to announcing a significant reduction in its workforce that could be be made public as early as next week.

According to sources familiar with the company’s plans, (they asked not to be identified), AMD will announce next week that it will cut between 20 percent and 30 percent of its employees, which, given AMD’s headcount of about 11,700 11,100 workers, would amount to between 2,200 2,300 and 3,300 3,500 jobs.

The cuts, the sources said, will affect employees involved in engineering and sales, groups of employees that have been spared in previous rounds of cuts. Additionally, these people, who are familiar with the company’s operations, suggest that the cuts will be deep enough as to indicate that AMD may be forced to scale back some of its product offerings.

The cuts might be disclosed when AMD announces its quarterly results on Oct.18, or the announcement could come on Oct. 25, sources said. One source said the cuts may be completed by the 25th, at the close of a 10-day process.

CEO Rory Read is said to have brought in a team of business consultants from McKinsey & Company and BCG to advise the company. McKinsey’s role is said to involve handling the cuts, while BCG is said to be consulting on what one source described as a “grand strategy” to take the company forward.

One source described the mood within AMD as grim. Employees have been expecting the cuts for some time. “There are a lot of nervous people, and not a lot is getting done right now,” the source said.

A third source said that the scale of cuts may be lower, closer to between 10 percent and 20 percent of AMD’s workforce, which would imply a range of between 1,170 and 2,300.

An AMD spokesman declined to comment.

This would be the second major reduction in AMD’s workforce since Read took over as CEO. The company announced a 10 percent reduction 11 months ago. Those cuts amounted to about 1,400, and were necessary, the company said at the time, to reduce operating expenses by $118 million in 2012, and by $10 million in the fourth quarter of 2011.

The cuts will be announced during a period when AMD has been losing senior executives at a substantial clip. Last month, CFO Thomas Seifert was the latest to leave; he is, according to an informal count tabulated by AllThingsD the 26th from among the company’s senior ranks to depart since Read, a former executive at IBM and Lenovo, took over as CEO.

Update: I revised the range of numbers slightly after looking at AMD’s latest disclosed headcount of 11,100 from its 10K report, filed in February. Also CNet News published a story on the pending layoffs a little bit before I did.

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