AMD feeling the pain of ATI…again

AMD feeling the pain of ATI…again

Recently we reported on AMD’s financial woes and subsequent staff layoff’s due to the current global economic crisis. Although AMD promptly denied the layoff’s, it appears that AMD are still hurting financially and the company has again written down ATI’s value. The Sunnyvale-based company will take a further, unspecified goodwill impairment charge related to its 2006 acquisition of ATI.

A goodwill impairment charge is essentially an admission by the company that it paid too much for an asset. Current federal regulations require that companies test the reported value of goodwill at least annually.

AMD already took one of these charges last summer; after this new impairment charge is calculated, it will have written down over 50 percent of the $5.4 billion value it assigned to ATI when it purchased the company.

A 50% hit to the value of an asset has got to hurt, regardless of the successes that the company has had in recent months. In addition to AMD admitting that they paid too much for ATI back in 2006, the company has has now announced that it has cut 600 employees – 100 more than originally expected.

I’m wondering how much more of this AMD can handle…

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