While AMD (mis)management was busy slipping the knife (dirk?) in to a quarter of the company, it looks like their chirpy ways had not subsided. Yesterday’s redux of revenue collapse was broken to the masses in a memo that said nothing worth a damn, but was quite upbeat.
Luckily for the delicate sensibilities of those about to be kicked to the curb, the memo mentions nothing of their impending fate. Instead, it uses a lot of words to say, well, nothing, but does it in that style that has made AMD (mis)management the darling of absolutely no one. The same vague buzzwords that utterly turned off Wall Street, the employees, and everyone else incapable of running away fast enough are repeated ad nauseum. As usual, no added insight is given to the reader, but that was expected.
If there was ever a memo that defined the current AMD (mis)management, this is it. Damn is it chirpy, you can almost see them smiling as the bus sails off the cliff.S|A
(Note: The memo below is reproduced as we received it. No changes other than formatting were made, any errors were in the original.)
CONFIDENTIAL – INTERNAL ONLY
To: All AMD
Subject: Q3 Preliminary Results
Yesterday, we announced our preliminary third quarter results indicating a decline in both our revenue and gross margin expectations. This was primarily due to weaker than expected demand across all product lines caused by the challenging macroeconomic environment. We expect Q3 revenues to decrease approximately 10% sequentially, where we previously forecasted third quarter 2012 revenue to decrease 1%, plus or minus 3% sequentially. We believe gross margin will be approximately 31%, down from the guidance of 44% due to $100 million inventory write-down, as well as weaker than expected demand. We expect operating expenses to be 7% below our prior guidance, which was accomplished through the efforts of AMDers across the business to reduce costs.
Clearly, these preliminary results are disappointing to all of us and not reflective of the hard work and commitment demonstrated by AMDers every day. There is no doubt we are working through significant change and are feeling the pressures of a challenging market environment. The factors that emerged earlier this year that impacted the market and our business remain, and we continue to feel those impacts. I am personally disappointed in our results but we will push forward.
The strategy we laid out at the beginning of the year is sound – building our differentiated IP through ambidextrous architectures, Heterogeneous Systems Architecture (HSA) and leadership in graphics and cores – but we must accelerate our plans to adjust to accelerating market tends. We have spent time with our Board of Directors and as an AMD Executive Team (AET) talking through our short and long-term strategy and the steps necessary to enable us to execute on the goals and objectives we set. We are paving and charting our own path to success, and we will face challenges and make tough decisions along the way.
I know you have many questions and we will address those in the coming weeks. Our earnings call will be held on October 18th and our next WorldCast on October 30th where we’ll talk about the evolution of our strategy in more detail along with our full Q3 financial results. The AET is committed to communicating as transparently as possible, and investing the time to ensure that we are all aligned across AMD.
The tough market conditions coupled with building a stronger AMD requires change to seize the opportunities in front of us – and we must embrace that change. I truly appreciate the hard work that has been put forth as we work through a difficult market and a changing business.