The painful cost of Advanced Micro Devices Inc’s restructuring was spelled out this week. The chip company, which has been hit by a string of losses amidst vicious price competition, said that its current restructuring will lead to charges of $300m to $600m in the fourth quarter.
The Sunnyvale, California-based company said it will also record a charge to income tax expense to establish a 100% valuation allowance against its deferred net tax assets of $263m. This charge will reduce aftertax results, but not cash, cash flows or its pre-tax results. This means that charges after tax will be between $563m and $863m.
AMD announced last week that it was cutting 1,000 staff, with a further 1,000 to go before the middle of next year. The company is desperately trying to pull back its break even revenue point.