In a widely anticipated move, besieged chipmaker
Advanced Micro Devices
said Thursday that it will lay off about 15% of its staff, cutting about 2,000 jobs.
Reacting to the announcement, shares rose 12 cents, or 1.9%, to $6.45 in early afternoon trading.
Earlier this month CEO Hector Ruiz said job cuts were in the offing as part of a corporate overhaul to reduce AMD's break-even point and slash expenses by $350 million next year. He said the company will take a restructuring charge of several hundred million dollars in its fourth quarter to cover the cost of severance packages.
At the time, Ruiz also forecast that AMD will return to profitability in 2003. The microprocessor outfit has now lost money for nine consecutive quarters.
But a skeptical Wall Street expects AMD to stay in the red until the last quarter of 2004, on the basis of earnings estimates from Thomson Financial/First Call.
Leading up to the announced layoff, analysts have speculated that the company could only survive for four or five more quarters at its current cash burn rate.
In a prepared statement, Ruiz said the action "will help to position AMD so that we can take full advantage of the eventual market recovery," adding that the company aims to release a number of products in new market segments over the next six months.