AMD reports it has taken a $880 million writedown on the value of ATI's handheld and digital television units in the second quarter because these divisions have not performed in accordance with the company's expectations.
AMD acquired ATI for $5.6 billion in 2006 and this is the second time they're forced to write down a hefty chunk of their ATI business - in the fourth quarter of 2007 AMD wrote down more than $1.6 billion of ATI's goodwill. Basically this means AMD admits they paid almost $2.5 billion too much for ATI.
Also in its second-quarter results, AMD will take $32 million in restructuring charges. The chip maker will lay off 1600 employees, roughly 10% of its work force, by the end of Q3 2008. Furthermore, they will record $36 million in impairment charges and a $190 million gain related to the sale of 200mm wafer fab tools.
The two units are part of AMD's consumer electronics segment that it acquired from ATI Technologies last year.
The company also expects to take $32 million in restructuring charges in the second quarter for employee severance.
The restructuring effort begin in the second quarter and is expected to be completed by the end of the year. It said it does not expect employee severance costs for the rest of the year to be material.
AMD also said it will record $36 million in impairment charges related to the company's short-term investments in flash memory chip maker Spansion Inc. and auction-rate securities.