It's not a mirage. Really.
Advanced Micro Devices Inc.'s financial results have not reflected this but the microprocessor and graphics IC vendor has indeed changed in numerous and quite significant ways after several years of restructuring.
True. It can be difficult figuring out the extent of the changes that have occurred over the course of the last three years at the company because AMD's strategy of doling out details of its reorganization in bits—while keeping investors in suspense regarding plans for major operational areas such as manufacturing—have kept the rumor mills busy.
However, while AMD's failure to turn a profit in the last several quarters have raised doubts about the overall effectiveness of its reorganization plan, a closer look at the company's more recent announcements indicates the IC vendor is conducting the corporate version of an extreme makeover upon which executives pin all their hopes for the company's future.
The company's reorganization appears to have been structured along the following operational line:
First, reorganize the upper management—a process that is continuing; second, jettison non-core product lines; third, sell other fixed assets, including fabs, if necessary, but maintain some control over manufacturing through strategic partnerships.
Fourth, reduce workforce through direct layoffs and sale of businesses; fifth, improve liquidity position by raising funds through the sale of shares/equity stake; sixth, tidy up balance sheet by writing down or writing off the value of previous acquisitions to bring them in line with current market valuation and; seventh, cut capital expenditure.
The management's goal is to get AMD to operational profitability by the end of the December 2008 quarter.