AMD To Take $948 Million In Charges In Second Quarter - InformationWeek

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Infrastructure // PC & Servers

AMD To Take $948 Million In Charges In Second Quarter

In a SEC filing, the chipmaker said the majority of the charges relate to its acquisition of ATI Technologies.

Advanced Micro Devices on Friday said it would take charges totaling $948 million in the second quarter, with most of the money related to the 2006 acquisition of graphics chipmaker ATI Technologies.

In a filing with the Securities and Exchange Commission, AMD said the ATI-related charges amounted to $880 million for good will and intangible asset impairment.

The remaining charges included $32 million stemming from recent layoffs at the company. AMD, which reported in April a $358 million loss in the first quarter, has been conducting layoffs and other aggressive cost-cutting measures to break even by the end of the year. AMD executives blamed the losses on softer-than-expected demand for its products because of a slowdown in consumer spending.

In addition to the layoff charges, AMD reported to the SEC plans to take a charge of $36 million for the impairment of certain short-term assets. The company also said it expected to record a gain from the sales of wafer fabrication tools used in manufacturing. AMD estimates the sales will have a "materially favorable impact" of $190 million on the chipmaker's gross margin.

AMD is scheduled to release second-quarter financial results July 17.

AMD in the first quarter started volume shipments of its quad-core Opteron server processors, which had been code-named Barcelona, and launched quad-core and triple-core Phenom processors for desktops. The company also launched a graphics chipset for motherboards and an updated line of ATI Radeon graphics cards. The company also demonstrated its first 45-nanometer quad-core processors for servers and desktops, which it expects to ship in volume by the fourth quarter.

In the second quarter, AMD released its first platform built solely for notebooks, the fastest growing segment of the PC market. AMD had lagged behind rival Intel in this all-important market.

With the recent releases, some analysts believe AMD's current product line is a strong competitor to the larger Intel.

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