AMD Is Bleeding Cash And Is Firing Employees To Cut Costs

AMD, a company who once battled fiercely with Intel to develop the latest computer processors, is reportedly in the process of firing employees to significantly reduce expenses as the chipmaker faces some serious challenges both financially and technologically. The company’s cash has declined to $1.5 billion in the third quarter, after losing $279 million in the previous period. A continuing trend would mean cash levels would drop to $600 million by this time next year, and with $2.04 billion of debt — it’s not looking good for AMD.

AMD’s best days were in the early 2000’s, when they were constantly battling Intel for the best computer processor. Prior to the release of Intel’s Core 2 Duo line of processors, the top spot appeared to be up for grabs with many people recommending AMD’s line of CPU’s over Intel’s. However, that all changed with the release of the Core 2 Duo and from there it’s been essentially all Intel. But it wasn’t just the Core 2 Duo that has hurt AMD, it’s been the shift in technology — from desktops to mobile devices such as smartphones and tablets that has hurt the company the most.

So it’s really no surprise that AMD is doing so poorly. The company’s lack of a product line that rises to today’s challenges (battery life, speed, etc) can explain the major issues that are being faced by AMD right now. But it’s not just that AMD cannot compete in the new markets, it’s also that the older market (PC market) is shrinking, and shrinking fast. In fact, the global PC market is expected to shrink by 1.2 percent to 348.7 million units this year, according to IHS ISuppli. And while would be the first annual decline since 2001, it’s most likely not going to be the last as we move more and more towards mobile devices.

What’s going to happen to AMD? I’m willing to bet, if they aren’t able to turn it around, that when the company is close to bankruptcy, it will be acquired for its intellectual property. Who will acquire it? Your guess is as good as mine at this point, but Intel, Nvidia, Qualcomm, ARM, etc are all potentially good candidates.