So what’s going on at AMD? (NYSE:AMD) With the recent layoffs, we decided to dig a little before we commented, and hopefully add a bit more insight. That said, nothing good happened last week.
As you know, we exclusively reported some of the layoffs early, but missed the massive amount of the cuts. Those had been rumored for a long time, but the rumors were saying it was coming in early 2012, not now. Time to upgrade the moles to a new genus, maybe ones with longer digging claws.
If you look at the layoffs themselves, there are two things that come to mind, the magnitude, and the unevenness. About 1400 people were let go, over 10% of the work force, but some departments were hit much harder than others. To top it off, the people who normally talk to the public about this type of matter were, well, laid off too. This made for a rather chaotic situation when the press were all wondering what was going on, called people they had known for years, and literally everyone they tried to reach was gone. That caused some rather dire predictions, and was quite possibly the largest hit AMD took, but it was entirely self-inflicted.
PR was devastated, no question there, almost everyone is gone. NPRP, new product review program, is basically gone, as is what looks to be the entire trade show team. Both of these should lead to hilarity in the coming few weeks, there are two big launches coming soon, not to mention trade show season, and no one to hold the fort.
That said, AMD made some changes last spring, they let go their supplemental PR firm Bite, and hired Edelman. It was pretty clear that they were going to lean more on outsourced PR than internal people, which likely explains why the PR cuts were so deep. That said, if you go to a show, and go to the AMD booth, ask a product question, there are two things that can happen. You can get an answer, or a referral to someone who can answer it, or you can get a blank look. If you have people with long histories at the company, you get the former, temp staff, the latter. Which do you want representing your company?
NPRP is a deeper problem. With the new notebook lines coming out really soon, followed by desktop GPUs, then Trinity, there is no one there to talk to and work with reviewers. When I say no one, I mean none, they are literally all gone. Bulldozer server reviews? Nope. So people will get parts on their own, run what they like, and AMD will very likely get hammered in the press because they don’t have a chance to explain issues, fix potential problems (Note: Early hardware always has problems when reviewing it, sometimes it is a bug, sometimes it is the reviewer missing something, but nothing ever goes smoothly), or get a word in. It will be interesting to see how this pans out.
Back to the cuts, it was rumored that engineering got off lightly. That is true to an extent, but some things were absolutely crushed. The biggest change was that all fusion related engineering not in Austin was cut wholesale. Some may see this as needed consolidation, but modern engineering has advanced to the point where distance isn’t an impediment to teamwork any more.
These cuts and consolidations will pay benefits, but the downsides are huge. They devastated some long standing design teams, and that kind of thing can’t be reformed with a help wanted sign, things can take years to gel again. If you don’t think this is a big deal, one of the largest and most painful cuts was John Brüno, recent movie star and, well, lead engineer on Trinity. Cutting the lead engineer and likely a lot of his staff on your most crucial upcoming product at a very critical stage in development is abjectly stupid.
That brings us to the next big thing, the big announcement tomorrow. There is something that AMD is hinting at called project WIN, and it is likely something that has been rumored for months now. If it is what we hear, we don’t think the name is appropriate, not even close.
Going back to January’s Dirking, we have long heard that the reason behind this was something other than what was reported. The direct cause was said to be a personality clash between Mr Meyer and the board, but the reasons for the argument were said to be over company direction.
Some, specifically a few board members, were enamored with phones and tablets, and wanted AMD to be there. AMD didn’t have the resources to fight that fight, and still doesn’t. AMD is just starting to get back on it’s feet, and if you look at the direction of Brazos, Llano, and Fusion in general, it is clear that the crystal ball gazers hit the nail on the head for direction. AMD has the right product at the right time, production issues aside. They pulled off another integrated memory controller rather than chasing fashion whims with no margin and brutal competition.
Most would call this a smart thing to do and a wise use of scarce resources. Instead of congratulating those visionaries, SemiAccurate has been hearing that the calls to chase fleeting markets were ramped up. This lead to a heated exchange, and those visionaries were replaced with people more amenable to the new vision. If you look at the track records of those behind both directions, it is clear that one has been quite successful and one not.
The rumor de jour is that AMD will announce an ARM license tomorrow, and move the company in the direction of cell phones/tablets/widgets and other zero margin niches. Given the competition in those markets is much greater than AMD has ever faced before, Intel included, and AMD has zero wireless experience, not to mention patents, we think this is a monumental mistake.
AMD has already set the groundwork for ARM integration, but they would be much much better off as an IP provider than a chip maker. Short of buying an established player, we can’t see this working out too well. Buying an established player, if it is financially possible, would be a really messy integration challenge, something AMD is ill prepared for now.
What will happen? Will things all work out in the end? Will all of this be a distant but painful memory when the Q1/2012 numbers are released? Who knows, but the first official clues about the new direction will come out tomorrow morning, and it will be interesting. Where it goes from there is anyone’s guess. Either way, our condolences to all those who lost their jobs, SemiAccurate hopes things work out well for you.S|A
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