AMD Reinstates Pay

Advanced Micro Devices (AMD - Analyst Report) recently announced that the pay cuts it had initiated in January this year would be reinstated in December. Hourly workers had suffered pay cuts of up to 5%, while executives at higher rungs took bigger cuts of up to 20%.

The company expected the job cuts and rationalization of pay to help it deal with recessionary pressures that were hurting its already unprofitable business.

In March, the company signed a deal with an Abu Dhabi state-sponsored financial institution that brought in some cash, enabled it to operate in a fabless model and improved its chances of achieving profitability in the near term.

CEO Dirk Meyer said that the company’s new product lineup and the strengthening economy were the reasons for the increased confidence. He expressed optimism regarding the company’s achieving profitability by year-end.

Some analysts expect the company to benefit from Hewlett Packard Co.’s (HPQ - Analyst Report) decision to cancel some existing programs with chip giant Intel (INTC - Analyst Report). Even if it does not make such gains, AMD will undoubtedly benefit from the turnaround in the chip market.

Chipmakers Intel and Texas Instruments (TXN - Analyst Report) recently raised their guidance for the third quarter, citing improving business conditions. Semiconductor equipment makers ASML Holding NV (ASML - Analyst Report) and KLA-Tencor (KLAC - Analyst Report) also raised their forecast. While foundries Taiwan Semiconductor Management Co. (TSM - Analyst Report) and United Microelectronics Corp. (UMC - Analyst Report) saw signs of recovery, the SIA stated that global chip sales increased 17% in the second quarter, signifying a resurgence in the segment.

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