After reporting a two per cent drop in profits and missing its Wall Street targets AMD had to come up with another quick fix to placate the markets as its share price dropped 8 percent. The first axe fell on CEO Rory Read last week – today it’s the staff’s turn with 7 per cent of them facing lay offs.
Brand new CEO Lisa Su has moved quickly to show she has the answers. AMD is $2.2 billion in debt; it aims to save $9 million in the final quarter of this year, and has projected savings of $85 million in 2015. A lot of those savings will come from cuts to its over 10,150 employees.
Tough start for Su
Lisa Su’s problem is that AMD hasn’t made progress as quickly as it needs to. It has been trying hard lately to diversify its business but is struggling between being seen as the choice of PlayStation or Xbox gamers and its desire to catch up Intel in the enterprise world. Neither has it made the headway in the world of mobile which analysts and financers have expected.
The hard mistress that is Wall Street has led another tech CEO down the path of mass layoffs. If AMD doesn’t start turning the corner early next year it will face calls for a deeper re-organization as it faces new battles with Intel. Being number two in the PC market as mobile takes over will require fancy footwork that AMD has yet to demonstrate.
Su was one of axed CEO Read’s hires, and came to AMD from Lenovo, after a career at IBM. She was seen as a CEO in waiting but the switch came sooner than expected.