AMD Reportedly Preparing Massive Layoff

An anonymous reader writes "AMD is preparing to lay off 20 to 30 percent of its workforce after warning of a 10 percent decline in Q3 revenues driven by the weak global economy and PC sales, according to AllThingsD's Arik Hesseldehl. The layoffs will reportedly focus on engineering and sales, and are in addition to a 10 percent headcount reduction 11 months ago. Teams of consultants from McKinsey and Boston Consulting Group are reportedly swarming headquarters to advise the CEO Rory Read, who took over from Dirk Meyer a little over a year ago; several senior executives, including the CFO, have recently departed."

Comments

10% decline in quarterly revenues?

[Anonymous Coward]

Shut. Down. EVERYTHING.

Re:10% decline in quarterly revenues?

[Anonymous Coward]

Uh, yeah.

Down 6% in Q1, down 11% in Q2, and they were expected to be down 1% in Q3... instead they were down 10%.

Meanwhile they're not competeing in servers or smartphones, the PC market is shit and it isn't looking like it's going to get any better. Laptops are the one place they're strong, and nobody is optimistic on laptop sales.

It's bleak over there, and believe it or not, they've got a pretty good idea of just how bleak it is.

Re:10% decline in quarterly revenues?

[lightknight]

They're doing it to themselves in the PC market. They spent their resources on the Fusion crap, which while nice for low power devices, leaves the rest of us who want Phenom IIIs and Radeon 9900s out in the cold.

I'm at a FX-8150, and I have no AMD upgrade path. I am at the zenith of their multi-core designs, save switching to an Opteron processor, and I don't want to, because the motherboards are absolute crap. The next time Intel comes out with a top of the line processor, they're likely to get my money over AMD, simply because AMD isn't putting anything out there to compete.

Re:10% decline in quarterly revenues?

[hairyfeet]

And WHY are they so down? One word....FAILDOZER!!!

Even guys like me that support competition and thought Intel should have been busted for the bribery and compiler rigging have been avoiding Faildozer and why? Because its a bad design, its a server chip designed for integer workloads when consumer workloads are heavy floating point, gets beat in many benches by Thuban, the chip they canceled which just FYI was still selling well and more importantly was getting nearly 100% yields oh and just to add the salt to the wound they didn't bother to tell Microsoft what they were up to so the Windows scheduler ties a boat anchor to its already pitiful performance in all MSFT OSes except...Win 8, the Star Trek 5 of OSes.

Let us hope to all that is good that they don't end up tits up, because Intel already has high prices and without AMD they would go insane on the prices. personally i'll keep building AM3+ and selling E450s and Liano on netbooks and laptops but faildozer is just an awful chip. I hope the former Apple chip designer they got comes out with a worthy replacement for Thuban, instead of just trying to crank up the clocks on a bad design. Hmmm...where did we see that before? Oh yeah...it was called Netburst, only AMD can't afford to bribe OEMs into taking it.

Oh and just FYI but there is still hundreds of millions of X86 units sold a year so its STILL a good market where good money can be made, but AMD needs either the performance or at LEAST the bang for the buck, instead AMD has a design that is too hot, costs too much to make so they have to price it noncompetitive, and has poor yields and lousy performance. If your product is bad? Nobody buys, at least not enough to make money, simple as that.

Re:10% decline in quarterly revenues?

[WOOFYGOOFY]

I don't know. I read the performance benchmarks on the 8150 before I bought it and I thought they were pretty good, except Win 7 doesn't hardware but a few 2D graphics calls, which is NOT AMD's fault and impacts some benchmarks.

Now that I have it , I love it. I can see all 8 cores working, I can keep it all cool (75 F) no problem and the price / performance ratio is excellent, leaving out legacy PC chips whose price is near zero. The absolute performance is also pretty excellent.. for between US $100 and $500 you can get a chip that's another 30% faster from Intel, but why bother ? I'd rather put that money into an SSD and really feel some difference for my cash.

AMD is not making its earning predictions, OK.. and their real problem is Wall Street who's punishing their stock for it. It's not like they can't make great chips at great prices.

If Bulldozer 8150 was not literally 8x's a Phenom II in terms of power, well, it's still better by a bunch and at a great price. I love my 8150 and it's blazing fast for everything I want it to do. Highly recommended.

The thing with Intel is, internally they're actually a worse corporation than even you described. Head hunters I have known almost immediately blanched at their name when I brought it up and said things like .. I do not recommend anyone work for Intel. I have seen the same remarks by the same professionals in print.

Why? For generations now, it's been stocked to the gills with corporate psychopaths. Like above, so below. The level of viciousness of the politics is out of this world . For instance, there's something called "forced ranking" where 10% of their employees with the lowest scores on their reviews are automatically fired each year.

Killing every tenth person in order to improve performance has another name- decimation.. deci-mation. It goes back to the Romans. Crassus used it to motivate the troops to capture Spartacus. The thing is even then it was considered regressive, ancient and barbaric.

http://en.wikipedia.org/wiki/Decimation_(Roman_army)

Obviously, people in that environment are preoccupied with one thought - "not me".

Fucking over the other guy has evolved into a fine art there. Its totally vicious.

Maybe AMD stumbled with 8150 in some academic sense. I think I am a demanding consumer of PCs .. I build my boxes, and I sure don't feel it. If it was less than expected, which is very different than bad, well then, obviously, onward.

I'll never buy an Intel chip until they're the only chip maker on earth. Their business practices are as dirty and illegal as they come as the many lawsuits brought against them testify to. Is the Intel e3 1275 20% faster than an non-OC 8150 for another $150.00, almost twice the price of a 8150 ($169.00 Shell Shocker price this week) Fine. 20% for ethics and morality. It's what I give elsewhere in my life anyway.

Oh, and this giving works out to another $150.00 bucks in my own pocket. Now that's a decision everyone involved can feel good about....

Re:10% decline in quarterly revenues?

[MukiMuki]

Am I dreaming? Is this a dream?

The 8150 gets trounced by the overclockable i5 2500k in just about every benchmark under the sun. The 2500k is $30 more. AMD doesn't even RANK in the upper tiers of Tom's Hardware's CPU gaming hierarchy.

To be fair, it's a card that's $30 cheaper and slightly outperforms the Sandy Bridge part in the highest levels of processing requirements (video encoding, 3D rendering, basically things that can hit 8 honest threads of use), but it gets hammered EVERYWHERE ELSE.

That's to a system builder. On the pre-built retail desktop/laptop circuit (read: the grand majority of sales), the situation is far worse, where that single thread performance gap makes the AMD parts look really bad.

Re:10% decline in quarterly revenues?

[ifiwereasculptor]

The 8150 has many problems, but that's the first time I see anyone complain about its upgrade path. The thing is the 8150 is currently the flagship. Vishera is about to be released for the same AM3+ socket, with modest improvements. If you had an i7 3770k, you'd be complaining about the same thing, unless you went LGA 2011 (then again, if you did and got a $1000 processor, you'd be in a position to make the same complaint again). In fact, you're relatively better off than an i7 2600k owner because Vishera will probably bring a bigger performance improvement over Bulldozer than Ivy brought over Sandy (which, considering how the 8150 performs, isn't exactly impressive).

Re:10% decline in quarterly revenues?

[WOOFYGOOFY]

I do not think I am debunking anyone; I am conversing. When I debunk, it's much bloodier.

This sums up the other link:

http://www.cpubenchmark.net/cpu.php?cpu=AMD+FX-8150+Eight-Core

Let's say 8150 is slower , 20-30% on single threading (I am not saying it's true, I am saying people say it) than intel's chip. Is single threaded the normal use-case or is that a competitive gamer thing (obsession) where the only thing separating you from your opponent is not skill or strategy but CPU speed on a single thread.?

Mostly, in my life, I am using more than one thread. I am doing a number of things at once. The OS wants one (or more). My programs all want as many as I've got. Even people who aren't working with IDEs and rendering applications are still, say, listening to music and watching a video and all this kind of thing all at once.

Intel's chip costs more, are slower except on single threaded applications, Intel is evil. I can OC the chip easily and have a nice stable system that is just as fast for zero extra dollars on a single threaded application.

But the overall thing to not lose sight of is -the chips are stupifyingly fast . We can look at CPU bench marks all day but mostly they sit idle waiting for our I/O to hurry up.

Not arguing here. Just observing and thinking aloud.

Re:10% decline in quarterly revenues?

[halltk1983]

Those things are ridiculously expensive to design and build. Smaller processes, linear optimizations, it's not cheap. And they just flat out don't have the capital. So what they were trying to do was focus on the bulk market to build back up some of that capital. The problem is that they didn't get the contracts from the big name manufacturers to provide them in bulk, and most of the people that buy at home will pat 75% more for that 10% boost in framerate and go intel. I buy AMD for a couple reasons. 1) I like the products. Overall they fit my need at a price point I like. 2) I like the company. I know a couple folks that work (or maybe worked soon enough) there. 3) I like competition. It keeps Intel's chips cheaper. I think that when AMD falls, the intel chips will go up in price, and then we'll be stuck with ARMs in our gaming rigs withing 5-10 years.

I just wish that more people bought their products for their machines, because we need them around.

How about laying off the consultants instead?

[KingSkippus]

How about laying off the consultants instead?

I'm serious. Consultants are nothing but leeches, and they will almost always give you advice on how you can make your company just like every other company in your industry. I yearn for the days when companies looked for ways to set themselves apart, to stand out from the crowd, instead of trying desperately to follow lockstep in line with everyone else. Other companies have massive layoffs, so hey, let's do it too!

Especially the engineers. You need engineers to keep doing what you do. This really bodes badly for AMD, because without engineers, they're basically slitting their company's wrists. I'll bet dollars to doughnuts that they're getting rid of the ones with seniority at that to try to save a few bucks on salary while simultaneously bleeding themselves out of knowledge and experience.

But hey, it's their funeral, so whatever gets the stock price up a little bit so that they can cash out their options, right?

Re:How about laying off the consultants instead?

[mewsenews]

Especially the engineers. You need engineers to keep doing what you do. This really bodes badly for AMD, because without engineers, they're basically slitting their company's wrists. I'll bet dollars to doughnuts that they're getting rid of the ones with seniority at that to try to save a few bucks on salary while simultaneously bleeding themselves out of knowledge and experience.

Early retirement - the perfect recipe for short term savings and long term loss of institutional knowledge!!

Re:How about laying off the consultants instead?

[Spy Handler]

Remember 10-15 years ago when the AMD chips beat the Intel chips, and forced Intel out of their complacency? With AMD gone where is Intel's motivation to keep the desktop going? Not to mention the graphics part.

You don't have to go back that far. In 2005 I bought an Athlon and it outperformed comparable Pentium 4 Hyperthreading chips. At that time Intel kept upping the clock speed but there was no corresponding increase in performance. My Athlon which was 2.2 ghz (i think) outperformed Pentium 4 HT 3.0 ghz.

It wasn't until Intel came out with the Core2Duo that they began to push AMD aside.

Re:How about laying off the consultants instead?

[Killall -9 Bash]

The "Core" core was what put intel back in the lead... and they didn't even develop it themselves. They purchased an Israeli company that was making a new CPU based on the old P-III coppermine core.

Intel was, up until that point, still fighting the MegaHurtz war. This is in spite of the fact that the war had already ended a few years back when the AthlonXP line was easily beating higher clocked P4s. Intel's only answer was MOAR MHZ!!!1, spreading FUD about the performance ratings assigned to the AMD chips, and silly branding schemes that made me smack my head every time someone insisted they wanted a Centrino processor.

I really resent Intel for "cheating" their way back into first place.

Re:How about laying off the consultants instead?

[edxwelch]

It's bullshit. The Isreali division of Intel were making a version called Pentium M, and that turned into Core

That tears it

[tsotha]

They hired the two Bobs.

Short term shareholder value

[Phelan]

What do you do when you are trying to maximize short term shareholder value in a distribution based business?
Cut R&D, get rid of sales staff for new markets...
Hit your profit goal, sell stock, get bonus by the time the company goes under you're long gone with your friends at McKinney.
Usually it takes 3 years in hardware for a R&D cut to show in sales figures... Mark it down also mark down the current CEO will be chilling on his new island by that time

Re:Short term shareholder value

[Anonymous Coward]

AMD is in the mess they're in right now because their previous R&D didn't pan out. Bulldozer turned out to be a failure and AMD's competitor to the Atom, while better in most regards, is in a low margin segment of the market so even if they did take most of the sales there, it wouldn't help their profit all that much.

What the hell are they supposed to do at this point? The only part of the company that's doing well by any standards is their graphics division (formerly ATI) but that's not going to be enough to keep everything floating. They're going to need to cut somewhere as they're not making enough money to pay the staff that they have. Their best bet is to hold out long enough that someone else acquires the company. Not really sure who'd want to at this point, but their market cap is so low almost anyone could take them over.

Servers

[corychristison]

And virtually all through Q3 I've been trying to get my hands on 4 Opterons 16-core (model 6272 I think).

Only last week Newegg finally received some of the new revised version but were out of stock for months.

Either they overcommitted to OEMs or they simply did not provision enough for people like me. If they were quicker to get the revision out I am sure they could have made up for that 10% drop.

I do understand this article is referring to desktop CPU's but the Opterons are still a part of their bottom line.

Pussies

[tsotha]

Am I the only one who thinks management teams that bring in consultants to do mass layoffs are pussies? If you fuck up a company so badly 30% of the employees have to go, the very least you can do is not hide in the proverbial closet until it's over.

Re:Pussies

[Anonymous Coward]

Management is probably not that good at determining who should go - especially as in this case it it not so much down to the individuals talent and contribution, rather it is more about his mission and his section and division's mission Managers don't normally do that - they are hired and trained to make tactical decisions.
Also add in the fact managers (at least the middle management) are equally eligible for layoff but are unlikely to recommend their own demise.
I don't see how anyone other than an external consultant could make a halfway unbiased judgment.

Re:Pussies

[Anonymous Coward]

What makes you think that if they were too incompetent to select the right people for the job and organize things properly,
that now they would be able to select which ones are the right people to get fired and how to organize that properly.

I have seen this exact scenario many, many times before.
The problem here is, that management itself is exempt from the firing.
And as long as that won't change, AMD is in for a long, seemingly endless Bataan death march to bankruptcy.
Only accelerated by Intel kicking them while they lie on the ground.

And usually, that never changes.
What rather happens, is that a small core team of experts goes on to create a new company, which then re-hires much of the old peers, except the idiots.
To then become competitive again.

Unfortunately, that takes *forever*.
So unless ARM and nVidia have some tricks up their sleeves, have fun with the Intel monopoly on desktop PCs for the next 10-15 years. :/

Bizarro World

[bignetbuy]

So, profits are down and the answer is to lay off the people who bring in the profits? Or the people who build the products that make the money?

How is this right in any sense of the word? Instead of spot layoffs to raise the stock price a few cents, AMD should be focusing on beating the tar out of Intel, Nvidia, and ARM manufacturers. Or wondering why AMD doesn't have a chip that can drive a tablet?

It doesn't really matter.

[Anonymous Coward]

Intel will just give them a few billion. Cheaper than to deal with antitrust issues if AMD goes bankrupt.

Re:It doesn't really matter.

[Anonymous Coward]

I can just imagine this phone call. "Hey Rory, it's Paul. Hey look, we were clearing up some stuff and found this old court case with you that's not settled yet. As you know, our graphics is improving, but still widely not well regarded, and I know we've got some process stuff you'd like to use. I was thinking we could roll up a settlement in the usual cross-license deal to make the NDA stick and throw in a little money to take the sting away... say, four billion? .... Yes, cash. .... Great. I'll have Stacy fax over the forms and we'll see if we can't get the funds transferred by morning. So how's Mary? Are you free for a round of golf next Tuesday? It's been a while."

Loss? What Loss?!

[Anonymous Coward]

Early retirement - the perfect recipe for short term savings and long term loss of institutional knowledge!!

But, but, its all documented! So even kids right out of school can replace the laid-off engineers when demand comes back.

Sheesh! It's not like they're VP's or something equally irreplaceable!

3. Profit!

Not exactly

[rsilvergun]

It's been said before and will again, AMD will not be allowed to die, if only because the PC manufacturers are clever enough to know they need at least two vendors for the most critical part of their product. If Microsoft hadn't played games with Windows 8's ARM build I'd say AMD might be on the chopping block for real, but well, that's Microsoft for you.

Consultants are not the devil

[rsilvergun]

yes, there are overpaid asshats out there. But most consultants are really just employees without health benefits and unemployement insurance. If you see a company with a lot of consultants that's why. You can fire them at the drop of a hat at no cost. It's a sign of the modern economy, and one of the reasons my political views swing so far left.

Re:Consultants are not the devil

[KingSkippus]

I don't think the kind of consultant you are talking about and the kind of consultant referred to in the summary are the same kind of consultant:

Teams of consultants from McKinsey and Boston Consulting Group are reportedly swarming headquarters to advise the CEO Rory Read...

These are the kind of consultants that tell the CEO that he doesn't need those expensive engineers with health benefits and unemployment insurance. For a reasonable fee (that will end up costing AMD even more money in the long run), these consultants will be able to bring in some of their company's other consultants and not have to worry about silly little things like benefits, thus reducing costs. For the next financial quarter or two--certainly long enough to cash out your stock options and find another job at a company that will pay you more because of your success here--it's win-win!

McKinsey? BCG? They are doomed

[gweihir]

These people focus on short-term optimizations. AMD needs a strategic fix, not a tactical one. A tactical one will only make matters worse.

They are setting up the company for a takeover...

[Anonymous Coward]

I'll bet dollars to doughnuts that they're getting rid of the ones with seniority at that to try to save a few bucks on salary while simultaneously bleeding themselves out of knowledge and experience.

I'll take that bet. I'm pretty sure they are doing the opposite: laying off all the junior engineers, support engineers, and the sales and marketing force in preparation for having some larger company (with their own army of overseas junior engineer worker-bees) take over. The consultants are there to negociate the headcount on behalf of the purchasers, they have nothing to do with the current management or the current product line. The consultants are like the home inspectors that a you hire when you are buying a house...

My guess is that larger company is probably one of Samsung or Qualcomm, secondary guess would be Apple or Microsoft. Both Samsung and Qualcomm have been hiring AMD (ex ATI) folks left and right for the last few months and if they can pick up AMD for a song, they will probably do it. What any of these companies don't need are a bunch of 2-5 year engineers, supporting engineers, nor sales or marketing employees as a purchasing company, they are likely to just abandon all the current (and planned) product lines. The only thing the want is the core engineering assets (GPU designers and high-speed CPU physical design group) and the patents to deploy in their own product lines. The consultants job is to figure out who those folks are. All the bulldozer architects and APU stuff will probably go in the dumper as soon as the deal is closed.

Put a fork in it. AMD as we know it is probably done.

Re:Byte the bullet & make ARM chips

[Rockoon]

Have a foot in both x86 and ARM.

You arent very well informed. AMD doesn't fab processors, so cannot possibly fab ARM processors. AMD is like ARM now and only designs processors, but unlike ARM they do not license the design out (probably they cannot, thanks to IP deals with Intel.)

AMD spun off their fab business in 2009, which is named Global Foundries, divesting their last shares in the company earlier this year.

Re:Damn.

[lightknight]

Aside from the botched FX series, AMD is fine in higher-end PCs. However, that last processor line screwed the pooch, and for some odd reason, they bought into the hype / nonsense about low-power devices being "The Next Big Thing," and failed to ready a new top of the line processor. They're doing it to themselves.

As for the server stuff, hell yes they need a separate line. Those 12-core and 16-core processors are selling like hotcakes among University / College net admins, who want as many cores as possible for their VMs / clouds / whatever. No one needs the slight single-threaded performance boost and huge cost disparity that Intel has been offering.

Current Intel employee

[Anonymous Coward]

Current employee here (I'm not an official spokesperson, this may not be the corporate line, yadda yadda) let me clarify some stuff.

The thing with Intel is, internally they're actually a worse corporation than even you described. Head hunters I have known almost immediately blanched at their name when I brought it up and said things like .. I do not recommend anyone work for Intel. I have seen the same remarks by the same professionals in print.

Why? For generations now, it's been stocked to the gills with corporate psychopaths. Like above, so below. The level of viciousness of the politics is out of this world . For instance, there's something called "forced ranking" where 10% of their employees with the lowest scores on their reviews are automatically fired each year.

Killing every tenth person in order to improve performance has another name- decimation.. deci-mation. It goes back to the Romans. Crassus used it to motivate the troops to capture Spartacus

Yes, we have problems with people who exist only to further their own career, or that somehow subsist by controlling information such that no one else can get it. The information hoarders in particular are annoying because you have to have their blessing to get stuff done. I believe that any organization with >80k employees is going to have this somewhere in their organization

We have some psychotic managers that act like 2 year olds. They put unattainable deadlines on the board and they hoard resources to do their job. I hear that this was the norm in the previous CEO's days because of the 10% layoffs of which you speak. The way it worked wasn't 10% of the worst employees, but rather entire departments would be cut for failing to meet the numbers. While I have a good manager, and several other people I know have, you may end up having one of these ancient trolls that still exist within the system. The perception is that Paul is trying to clean this stuff up, and the review process has been restructured to try to weed this out.

Intel does have a bad reputation in some of the local communities for various reasons. I hear stories of construction projects that never started, never finished, or sat around forever. I'm sure you're not wrong about your headhunter stories.

For reviews, employees are ranked in a scale against each other. You're put into one of 5 buckets, and you want to try to be in the top 3. The relative performance of each bucket is determined by the performance of you and your peers (i.e. you have to be better than your peers. If they all suck, the bar is pretty low, but if they're geniuses, you better work your ass off.). I don't think there's a set percentage for each bucket. If there's not enough people to compare you to at your site, you're compared to similar people in your hemisphere. This isn't all of it, like there's some more paperwork involved in getting feedback from coworkers and such, but at the end of the day you're in one of the buckets.