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Last updated: Monday, November 17, 2008

Many of the problems facing Advanced Micro Devices Inc. are of its own making. But the limited choices the chip maker has for solving its troubles are symptoms of an affliction sweeping through Silicon Valley. Slumping sales, big layoffs and devastated stock prices are becoming the norm, resurrecting memories of the malaise that gripped the Valley for years after the dot-com meltdown in 2000. Chip makers delivered the latest installment this week in what is becoming a litany of bad news from the technology sector. Intel Corp. and National Semiconductor Corp. both slashed their sales guidance, and National Semiconductor and Applied Materials Inc. said they will cut a combined 2,130 jobs. Intel imposed a hiring freeze. Semiconductor companies’ fortunes say a lot about the health of other tech industries, because slowdowns in chip sales can reflect slumping demand for everything from personal computers to cell phones. Meanwhile, Silicon Valley icons Yahoo Inc. and Google Inc. are also suffering. Shares of Yahoo, which is cutting 1,500 jobs, are trading around $11 per share, a third of the price that Microsoft Corp. was willing to pay to buy the company last May. Google’s shares sunk to a 52-week low of $287.76 this week after trading above $700 a year ago. Poor execution and a heavy debt load at AMD have allowed Intel to inflict severe damage on its smaller rival since 2006. The world’s No. 2 maker of microprocessors, AMD has lost $5.6 billion over the past eight quarters. AMD’s story about how it plans to reverse course offers a look at the drastic moves other struggling companies might have to consider if their problems worsen, from hacking off parts of the business in an effort to save costs to re-pricing employee stock options that are now worthless. “We’ve had enough of losing money,” the company’s new CEO, Dirk…

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AMD Makeover Moves Show Limited Choices in Slump

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