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AMD said Thursday it plans to cut approximately 15 percent of its global workforce, or nearly 1,770 jobs, in an attempt to slash operational costs and stay competitive in today's stunted PC market.
AMD CEO Rory Read said the reductions will take place largely throughout the fourth quarter of 2012 and are expected to account for nearly $20 million in operational savings by the end of the year, along with an additional $190 million in savings by the end of 2013.
"These are difficult, but necessary steps to ensure our plan has the right scale and scope to address the market and competitive challenges we face," Read said during a conference call with analysts Thursday.
[Related: AMD Eyes Tablet Market With New Z-60 APUs]
The Sunnyvale, Calif.-based chip maker said it expects to take a restructuring charge of approximately $80 million in the fourth quarter of 2012 as a result of the reductions.
As for third-quarter earnings, AMD reported a revenue of $1.27 billion, representing a year-over-year drop of 25 percent compared to the $1.69 billion in revenue it saw during the same period last year.
Also reported was a third-quarter operating loss of $131 million, compared to last year's operating income of $138 million, along with a net loss of $157 million, compared to a net income last year of $97 million.
Read said the planned headcount reductions, along with the lower-than-expected third-quarter results, stem largely from sluggish demand in the traditional PC market, as consumers turn more and more to mobile devices like smartphones and tablets, in lieu of traditional notebooks and desktops.
"Shortly after joining AMD, I talked about the fundamental changes occurring in the PC industry. These trends are occurring now at an even faster rate than anticipated," Read told analysts. "We underestimated the speed of this change in our industry and expected to have several years to transform AMD's business. But we must implement our transformation on a more aggressive timeline."
One factor driving AMD's transformation, Read said, is Windows 8. Microsoft's next-generation operating system, set to launch on Oct. 26, will be featured on more than 125 AMD-based systems, including tablets and several new lightweight notebooks AMD has branded Ultrathins.
What's more, Read said AMD, in general, will place a new emphasis on grabbing a share of the lucrative mobile market, a space that is currently dominated by U.K.-based chip licensor ARM. AMD's low-power APUs are being specifically targeted at consumer devices such as tablets, Read continued, in an attempt to gain a footing in this space.
"APUs are ideally suited for these new products ... from Ultrathins and tablets to a new breed of entry-level notebooks that will drive growth in the emerging markets," Read said on the call.