It wasn't a happy December for 600 AMD
Don't cry for the unemployed, though: AMD expects to record $34 million in cash costs related to severance payments and continued benefits this quarter. That works out to some $57,000 per lopped-off head and a pretty soft landing in hard times. And 600 out of 16,420 staffers (as of December 2007) works out to about a 3.7% workforce reduction. That's fairly drastic, but still far short of the rumored 10% cutback brewing at Microsoft
AMD's stepped-up layoffs may be bad news for employees, but they’re a good sign for investors. This shows that management has the intestinal fortitude to make tough moves when needed, as well as the opportunistic eye to ferret out cost savings in new places.
The company probably will fall far short of its projected guidance for the current quarter, especially since the layoffs and some new goodwill and investment writedowns laid a few extra stones on that burden. But the Shanghai chips are shipping in volume through big-name server vendors like Sun Microsystems
All of this adds up to a strong position in each of AMD's core markets. It won't kill NVIDIA or Intel
Worst-case scenario? Nope, I don't see a bankruptcy or liquidation, even if the long line of creditors come looking for early payoffs. Much more likely is an acquisition at a hefty premium to today's prices, probably at the hands of Big Blue or perhaps Sun. Win or lose, I believe AMD will still beat the market next year.
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Fool contributor Anders Bylund owns shares in AMD, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.