AMD pay cuts are temporary

Advanced Micro Devices this week told employees that it is reinstating old salaries after canceling an earlier cost-cutting program in which the company cut pay by 5 percent to 20 percent.

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Advanced Micro Devices this week told employees that it is reinstating old salaries after canceling an earlier cost-cutting program in which the company cut pay by 5 percent to 20 percent.

An e-mail from AMD CEO Dirk Meyer this week notified employees that salaries will be reinstated as of December, wrote Brenda Rarick, an AMD spokeswoman, in an e-mail on Friday.

"It is good news for our roughly 11,000 employees," Rarick wrote. However, Rarick didn't comment on why the salaries were being reinstated, citing the company being in the "quiet period."

AMD announced in January that it would cut the salary of full- and part-time workers in an effort to stay afloat during the recession. The salaries of Meyer and AMD's executive chairman Hector Ruiz were slashed by 20 percent, while the salaries of management executives were cut by 15 percent. The salaries of other full- and part-time employees were cut by between 5 percent and 10 percent. AMD said at the time the pay cuts would be temporary.

The December reinstatement is for all employees who had a salary reduction as part of that program, Rarick wrote.

The Austin-American Statesman first reported the news on Thursday.

According to the news report, Meyer wrote in the e-mail that AMD was expected to end the year on a profitable note. He noted that the economy was gaining strength and that the company was positive about its new products. The company held an event last week on an aircraft carrier in California to announce new products, including mobile processors, chipsets and graphics cards.

However, Meyer asked employees to control spending until the economy fully recovers.

AMD has suffered consecutive years of losses, but is slowly inching back to profitability. In July, the company posted a loss of $330m (£205m) for the second fiscal quarter of 2009, an improvement compared to a net loss of $1.195bn (£740m) reported a year earlier. However, pricing pressure, factory underutilisation and an inventory of aging chips partly affected profit margins, Meyer said during a conference call to discuss the results.

The company has also taken a number of steps to reach profitability. The company divested its digital TV assets to focus on profitable markets, including the graphics space through its ATI acquisition in 2006. Earlier this year it spun off its manufacturing operations to a separate company, that unloaded close to $1.1bn in debt from its books. The spinoff, GlobalFoundries, now manufactures chips for AMD.

AMD could benefit from the increased momentum behind laptops, demand for which could pick up when Microsoft's Windows 7 OS launches in October, according to a research note from FBR Capital Markets on Thursday. PC makers will release new laptops and netbooks later this year, which could boost AMD's chip sales.

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