With a new $500 million credit line and questions if its profitability is sustainable, layoffs may be on the horizon.
It’s no secret that AMD, while profitable, is in a financially perilous situation.
This past quarter the company returned to profitability, with a few caveats: it sold its Austin headquarters and is leasing it back from the bank, and revenues from consoles will slow to a trickle one the initial build up and shipment to channel has come and gone. The company is sustainable now, but future profitability is up in the air.
While the company has $1.2 billion in cash on hand, a multi-quarter downtick could erase those cash reserves entirely. In order to ensure AMD retains some “financial flexibility” the company has taken out a $500 million line of credit from a herd of lenders with Bank of America acting as the shepherd.
If the company sees itself running on credit in the near future it will no doubt need to reduce its headcount. Recently VR-Zone learned there is an “all hands” meeting scheduled for early December in Austin, with most staff from AMD’s worldwide offices flying in. Mass layoffs on the scale of November 2011 aren’t likely to happen, but CEO Rory Read will need to do something to make his company leaner if AMD falls back into the red.
More details will be available in December.