AMD to cut 10% of workforce

Chip maker also drops revenue forecast

Advanced Micro Devices Inc. today said it plans to lay off 10% of its workforce, or about 1,600 employees, by the third quarter of 2008 in an effort to cut costs.

As a result of the layoffs, AMD expects to take a restructuring charge of an undetermined amount in the second quarter. AMD has 16,500 employees.

The Sunnyvale, Calif.-based company also lowered its revenue expectations for the first quarter of 2008 "due to lower than expected sales across all business segments," it said in a statement. AMD is predicting quarterly sales of $1.5 billion, a 22% increase compared with the first quarter of 2007.

Analysts polled by Thomson Financial originally predicted net revenue of $1.61 billion.

AMD has been struggling since it acquired graphics vendor ATI in 2006, reporting five consecutive quarterly losses due mostly to charges connected with the acquisition. AMD reported a net loss of $1.772 billion in the fourth quarter of 2007, which was higher than revenue of $1.770 billion. The net loss included charges of $1.675 billion, mostly related to AMD's purchase of ATI.

During a conference call announcing the fourth-quarter results, AMD Chief Financial Officer Mario Rivet said that the company hopes to return to profitability by the second quarter.

Copyright © 2008 IDG Communications, Inc.

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