By INQUIRER staff: Thursday 07 November 2002, 09:44
WE OFFER THE FOLLOWING, for what it's worth. Seems the 15th of November is some kind of red-letter day. From: Ruiz, Hector Sent: Thursday, October 17, 2002 10:00 AM To: 'AMD@amd.com' Subject: Accelerating Our Efforts
Dear Fellow AMD Employees,
Like me, I know you have been reading the recent articles in the press about our company. According to those articles, our current stock price is justified and long-term viability is in question. Well, based on what I see going on throughout this company, I know they are way off target. And I suggest we spend the next few quarters proving just that.
We do need to address something that is the basis for the current outside view of our company, however. We cannot continue to lose money. I hope you will agree with me that the path to becoming the kind of leader we all want to be begins and ends with fiscal and financial credibility. And financial credibility only comes from sustained profitability - quarter to quarter, good times and bad. As a result, I believe it is time to accelerate our efforts to more aggressively take control of our business and, therefore, our immediate future.
In our Q3 earnings call, Rob, Bob and I reported our fifth consecutive quarter of losses. We must dedicate ourselves to ending this trend. To do this, we are outlining a portfolio of actions, including:
- rebalancing channel inventories; an action we took in Q3 to bring inventories in line with current PC market demand, - bolstering our capital structure; reducing capital expenses and refinancing assets to provide additional liquidity for 2003, and - reducing our breakeven point; where we committed to bringing our quarterly operating costs down by $100 million by early next year.
The first action is a one-time combination of swapping old inventory for new and shipping less product into the channel. All told, these actions cost us roughly $100 million in revenues last quarter, but should give the financial community more confidence in our baseline revenue projections. The second action ensures that we have enough money in our company "savings account" to deliver MirrorBit, Hammer and Alchemy solutions to the market in the coming year. This last action is the most important for attaining profitability - and the most troubling.
With all of the great things we're doing to position ourselves for success, the most important one - today - is to reduce our operating costs. And, unfortunately, the magnitude of this task dictates that there will be workforce reductions.
Rob Herb and the Operational Flexibility taskforce are working closely with the COC to quickly - yet strategically - identify opportunities to streamline our business activities and operations today, while preserving our capacity to respond to changing market conditions going forward. We will communicate more of the specifics of these activities in mid-November.
As a CEO, I can tell you that one of the most rewarding things about the job is helping to provide an environment where a growing number of great people can build great long-lasting careers. I can't tell you how disappointed I am that sometimes we have to take such difficult actions to ensure the long-term health of the company. What I know is that we need to do these things now, so we can get back to health and back to economic and market strength.
We are every bit as confident in our products, technologies and capacity to deliver them to the market as we have ever been. These very difficult actions we are now taking are necessary to realize our full potential as a market leader.
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