The Sunnyvale-based microprocessor chip maker chalked up an operating loss of US$131 million on revenues of US$1.27 billion in the third quarter ended on Sept. 30, which were 10% down quarter-on-quarter.
The main culprit was weak PC demand, as PCs are increasingly losing growth momentums to tablet PCs and other smart devices.
The chipmaker depends on PC microprocessor chips for the vast majority of its revenue. Between the June and September period, global PC shipments tumbled 8.3% from a year earlier to 87.5 million units, according to market research firm Gartner Inc., squeezing chipmakers' profitability.
“The PC industry is going through a period of very significant change that is impacting both the eco-system and AMD, “ said Rory Read, AMD president and CEO.
Breakaway strategies
According to him, the change is not cyclical, but structural, rapidly reshaping the PC industry at a faster rate than expected.
“As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model," added he.
AMD plans to restructure all of its global operations not only by slashing work force, but also exploring a way to cut down on costs.
The main goal of the restructuring is to save operation costs to finance its departure from low-margin commodity PC business.
“Our restructuring efforts are designed to simplify our product development cycles, reduce our breakeven points and enable us to fund different product roadmaps and strategic breakaway opportunities,” stressed CEO Rory Read.
He said that reducing work force is a difficult, but necessary step to take advantage of the eventual market recovery and capitalize on growth opportunities for other products than traditional PC market-bound chips.
AMD expects the downsizing efforts to help save approximately US$20 million in the fourth quarter.
Focus on other than traditional PC markets
AMD released the AMD Z-60 APU tablet PC processor for upcoming Windows 8 tablets in third quarter. Supporting full HD 1080p of resolution, the AMD Z-60 APU delivers up to 10 hours of idle battery life, nearly eight hours of Web browsing and six hours of video playbacks. Yet, the chip maker lags far behind other chip makers like Intel, Qualcomm, and Nvidia in its product development roadmap for tablet PC processors.