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AMD shows the impact of a weak PC market with more job cuts

AMD is having to swing the axe on 5% of its workforce as it continues to restructure its business

It has been a while since job cuts have been a regular theme in the industry thanks largely to better economic times but they are resurfacing as a result of vendor responses to changes in the market landscape.

The cuts are coming predominately from those operating on the hardware side of the business with firms reacting to the ongoing decline in the PC market and the general shift towards cloud and greater mobility.

Last month, HP revealed that a potential 30,000 staff could be shed as it enters life post split. In August, Lenovo had to accept that it could not continue to defy gravity in the PC market without suffering some consequences and made it clear that 3,200 staff, around 10% of the workforce would go.

Adding to a picture of vendors scrambling to recalibrate their staffing levels in reaction to a changing world comes one of the main names connected to the PC market, AMD.

The firm has found life getting more difficult in recent times and has already swung the axe, cutting 7% of its workforce this time last year, as part of ongoing restructuring efforts.

But the chip maker has found that more needs to be done and it is again using a strategy of issuing pink slips, lowering its real estate footprint and keeping a firm grip on costs to try and deepen the impact of its restructuring efforts.

The firm has a plan which it states: "is focused on the Company's ongoing efforts to simplify its business and align resources around its priorities of building great products and deepening customer relationships".  

As well as a 5% reduction, 500 people, in its workforce the plan also includes the prospect of outsourcing certain IT services and application development plus a further consolidation of its real estate portfolio.

The vendor expects to take a $42m charge for its latest round of restructuring, with $41m of that being recorded in its third quarter.

"The savings from the Plan are anticipated to be approximately $2 million and $7 million in the third and fourth quarters of fiscal year 2015, respectively. The Company anticipates savings of approximately $58 million in fiscal year 2016. The actions associated with the Plan are expected to be substantially completed by the end of fiscal year 2016," the vendor stated in an SEC filing.

According to sources the planned wave of cuts will be white-collar positions and not fall on the chip making operations.

The danger that has been raised by some industry watchers is the impact that these cuts will have on the ability of AMD to compete and on its R&D efforts.

Along with some of the hardware players the troubled fortunes of the PC world have taken their toll on AMD with the vendor's most recent results for Q2 including a 35% year-on-year revenue drop as a result of weakness in the market.

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