Earnings fallout: AMD shares plunge 15 percent

The stock markets are bleeding today, the ticker all red with barely any green, especially in tech. Bleeding worse than the rest, with a double-digit percentage plunge: AMD. Shares of the Sunnyvale chip maker were down nearly 15 percent to $2.25 as of this post, not too far from its all-time low of $2.16, reached in 2008.

Advanced Micro Devices on Thursday announced third-quarter earnings that missed estimates, with sales down 25 percent from the year-ago quarter and a loss of $157 million, which was wider than expected. It also is laying off 15 percent of its workforce as it moves forward with a “transformation on a more aggressive timeline,” CEO Rory Read said during the conference call.

Wall Street usually cheers layoffs as a cost-cutting move, and MarketWatch points out that  AMD will save $190 million from getting rid of workers. But as AMD realizes it has to expand to the mobile market and other areas amid the slowdown in the traditional PC market, “they have to cut 15 percent. I think it’s going to be disruptive,” Bernstein Research analyst Stacy Rasgon said, according to the Merc’s Steve Johnson.

AMD has struggled amid the rise of smartphones and tablets; its failure to enter the market in a timely fashion was cited as the reason Dirk Meyer was forced out as CEO last year. Read, from PC maker Lenovo, was brought in as chief executive last August.

 

 

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