Silicon Valley chipmaker Advanced Micro Devices reported a fourth quarter net loss of $1.4 billion, or $2.34 per share, on revenue of $1.16 billion, a 33 percent drop from the same quarter a year ago. For the year, the company reported a net loss of $3.1 billion on revenue of $5.8 billion, relatively flat from 2007's net loss of $3.4 billion on revenue of $5.9 billion. In a statement, CEO Dirk Meyer said:
Although industry visibility is poor, our priorities remain clear and achievable. We remain focused on further reducing our breakeven point through targeted restructuring actions while ensuring we execute our highly-competitive product and technology roadmaps... We expect our ongoing restructuring actions and asset smart strategy, combined with the strength of our innovative product offerings, will leave us well positioned for a global market recovery.
Last week, the company said it would eliminate 1,100 jobs - roughly 9 percent of its workforce - in the first quarter and announced a suspension of its 401(k) match for employees. It also announced widespread salary cuts across the company - the largest coming from 20 percent base salary cuts each for executive chairman Hector Ruiz and CEO Dirk Meyer.
The economic slowdown is having broad impact. AMD's news of layoffs and salary cuts came a day after rival Intel reported a terrible fourth quarter of declining revenues, one of its worst since 2000. Earlier today, Microsoft announced earnings that fell short of expectations and said it would eliminate 5,000 jobs.
In addition, the company also said that Intel inquiring about the AMD's plan to spin-off of its manufacturing business into a joint venture largely funded by Abu Dhabi investment companies, announced last year. The spin-off would bring in the billions of dollars that AMD was struggling to find to construct state-of-the-art chip plants needed to build the smaller, faster and more energy-efficient chips that compete with Intel’s. Intel and AMD have patent cross-licensing agreements. The deal is expected to close in February.
AMD spokesman Drew Prairie told Marketwatch that "the letter is another attempt by our competitor to cause uncertainty."
Shares of AMD were down more than 10 percent in regular trading, closing at $2.02. Shares continued to declines, down about another 3 percent in after hours trading.