Charge It!. . .

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AMD is going to declare a really big loss next quarter on top of their regular operating loss, and this
will try to briefly explain what they are and whether they matter or not to the average reader in this audience.

Paying For A Diet

The first part is what’s called a restructuring change. That’s a fancy way of saying, “What it costs to get rid
of a lot of people.” AMD is estimated this will cost the company somewhere between $300-$600 million.

This is a figure that bears watching, because it seems awfully high compared to the cost of AMD’s last restructuring, which got
rid of about the same number of people for only $90 million. There’s some reasons why the figure is likely to be a good deal higher this time around, but it’s hard to see why this would cost AMD $300 million, and really hard to see $600 million, unless AMD is also downsizing Dresden.

In any case, a chunk of this will cost AMD real cash, and AMD’s estimate that the cash layout will be about a third of the total costs looks to be in line with earlier big layoffs.

An Accounting/Tax Change

AMD is also claiming “a $263 million non-cash charge to tax expense for a 100 percent valuation allowance.”

Here’s the one sentence explanation: This doesn’t cost them real money.

A simplified complete explanation would take about ten paragraphs, and if you don’t have some accounting background, it would probably confuse you more than explain.

Probably best to just say this: this move indicates that at least the AMD execs believe they’ll be making some money next year, and sooner rather than later.

Ed

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