No 2 chipmaker AMD reports higher-than-expected restructuring costs

31 December 2008

US chipmaker Advanced Micro Devices Inc (AMD) said on Monday it laid off 600 workers, 100 more than first announced, and was taking yet another charge related to its $5.4 billion purchase of ATI Technolgies Inc.

AMD said it cut 600 employees in its most recent quarter, compared with the 500 it had originally planned. As a result, the company now expects to record $70 million in restructuring charges, versus the $50 million it previously predicted.

About $34 million of the $70 million total will be directly related to severance costs and the continuation of employee benefits, according to AMD. Other costs will include $13 million for terminating contracts and programs, $17 million to account for asset impairments and $6 million for closing and consolidating facilities.

In addition, AMD reiterated that it expects to take further cost-cutting actions during the first half of next year, which will lead to additional charges against earnings. And the struggling company said it can't yet put a value on a planned goodwill impairment charge related to its 2006 acquisition of graphics chip maker ATI Technologies Inc.

The announcements came in a filing that AMD submitted to the US Securities and Exchange Commission yesterday. That filing addressed the company's expected financial results for the fiscal quarter ended 27 December. AMD expects to declare the numbers on 22 January.

The company, on course for its third-straight annual loss this year, is striving to keep up with larger rival Intel Corp as demand for PC chips slumps. Intel has captured market share by adopting newer technologies more quickly.