AMD Announces Job Cuts, Salary Reductions

The slumping economy continues to impact the job market as Advanced Micro Devices Inc. has announced its plans to cut 1,100 jobs. These cuts represent nine percent of its global staff.

An AP report released today said that the company will slash remaining employees’ pay as it hopes its third round of payoffs in a year will be enough to get the company through a tough time.

AMD (News - Alert) currently employs 15,000 workers, but plans to spin off its manufacturing operations. This spin off means 3,000 employees will not be affected by the company’s announcement. AMD cut 600 workers as recent as last month, in addition to 1,600 let go earlier in 2008.

Those workers who survive this round of layoffs will notice a change in their paychecks and it will start at the top. Both CEO Dirk Meyer and executive chairman Hector Ruiz, the former CEO, will experience a slash in pay by 20 percent.

Vice presidents and other top management will notice a 15 percent cut in pay. Other salaried workers will see a 10 percent decrease and hourly workers will lose 5 percent of their pay. The good news is that AMD plans for these cuts to only be temporary, although these announcements did impact the company’s shares which fell 2 cents on Friday.

The smaller rival of Intel (News - Alert) Corp., AMD has been in the middle of a big restructuring as it changed leadership and sold nearly one fifth of the company to an investment arm of the Persian Gulf state of Abu Dhabi. The company has struggled with product delays and a huge debt from its $5.6 billion acquisition of graphics chip maker ATI Technologies (News - Alert).

Although AMD has been struggling in its attempt to compete against Intel, the larger of the two has not been fairing much better. Intel reported just Thursday that fourth quarter profits had dropped 90 percent and sales fell 23 percent.

AMD anticipates that its own reporting will show sales coming in at 33 percent lower than one year ago. In addition, the company has lost $5.6 billion with analysts predicting that relief will not come anytime soon.

In a regulatory filing, AMD revealed that it plans to write down ATI’s value by another $684 million, which will appear in the quarterly results next week. Previously, the company had slashed the value of ATI by nearly $2.5 billion. The charges taken together will mean that AMD believes ATI is worth less than half of what the company paid for it.

If these cuts are any indication of what is to come in this area of the industry, this is likely only one of many announcements of cuts. As long as companies continue to focus on cutting back, companies such as Intel and AMD will suffer, along with those who are losing their jobs. As the inauguration of the new president draws near, many are praying it will bring relief.