Original URL: https://www.theregister.co.uk/2008/07/11/amd_write_offs/
AMD takes a $950m hit in Q2
From plucky upstart to just plucked
AMD has bitten the write-downs bullet and will take an $880m impairment charge on parts of its ATI Technologies acquisition in its second quarter results.
The struggling chip vendor revealed the massive write-down in an SEC filing today, which also disclosed a series of comparatively small charges which will nevertheless swell its total write-offs for the quarter to the end of June to $948m.
AMD said the $880m charge came on good will and assets associated with the handheld and DTV units of its ATI Consumer Technologies Business, which it said had not performed to expectation. It said the write-offs would not require any actual cash spending.
However, it will be paying out real cash to the workers it is currently getting rid of as it tries to claw its way back to breaking even. The company will take a $32m restructuring charge in the second quarter, which will mainly cover the cost of dumping staff. It expects further costs as it continues to axe workers, but said these will not be material.
At the same time, it will incur “other-than-temporary investment impairment charges” of $36m, including $24m on its investment in Spansion Inc and $12m on its holdings in Auction Rate Securities.
The only good news in today’s filing was that the figures would include a gain on the sale of some of its 200mm wafer fab tools, which will add $190m to its gross margin. Of course, that begs the question: How much would it make by flogging all of its chip making gear altogether?
Either way, the latest filing gave scant reassurance to investors who yesterday were reading headlines saying the firm was fighting for its life. This morning, they pushed AMD’s shares from yesterday’s low of $5 to $4.80. A year ago, they were $16. ®