AMD 2012 Annual Report Download - page 28

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our key suppliers may reduce their output or become insolvent, thereby adversely impacting our ability to
manufacture our products. In addition, uncertain economic conditions may make it more difficult for us to raise
funds through borrowings or private or public sales of debt or equity securities.
If we cannot generate sufficient revenues and operating cash flow or obtain external financing, we may face a
cash shortfall and be unable to make all of our planned investments in research and development or other
strategic investments.
Our ability to fund research and development expenditures depends on generating sufficient cash flow from
operations and the availability of external financing, if necessary. Our research and development expenditures,
together with ongoing operating expenses, will be a substantial drain on our cash flow and may decrease our cash
balances. If new competitors, technological advances by existing competitors or other competitive factors require
us to invest significantly greater resources than anticipated in our research and development efforts, our operating
expenses would increase. If we are required to invest significantly greater resources than anticipated in research
and development efforts without an increase in revenue, our operating results could decline.
We believe that the challenging macroeconomic conditions that we experienced in the second half of 2012
will continue during the first half of 2013. We regularly assess markets for external financing opportunities,
including debt and equity financing. Additional debt or equity financing may not be available when needed or, if
available, may not be available on satisfactory terms. The health of the credit markets may adversely impact our
ability to obtain financing when needed. In addition, any downgrades from credit rating agencies such as
Moody’s or Standard & Poor’s may adversely impact our ability to obtain external financing or the terms of such
financing. Credit agency downgrades may also impact relationships with our suppliers, who may limit our credit
lines. For example, in the first quarter of 2013 Moody’s lowered our corporate family rating to B2 from B1, and
the ratings on our senior unsecured notes to B2 from B1. Furthermore, in the first quarter of 2013, Standard &
Poor lowered our corporate credit and senior unsecured rating from B to BB. Our inability to obtain needed
financing or to generate sufficient cash from operations may require us to abandon projects or curtail planned
investments in research and development or other strategic initiatives. If we curtail planned investments in
research and development or abandon projects, our products may fail to remain competitive and our business
would be materially adversely affected.
If we are unable to successfully implement our cost cutting efforts, our business could be materially adversely
affected.
In the fourth quarter of 2012, we implemented a restructuring plan designed to improve our cost structure
and to strengthen our competitiveness in core growth areas. The plan primarily involves a workforce reduction of
approximately 14% as well as asset impairments and facility consolidations. We expect the restructuring action
will result in operational savings, primarily in operating expenses, of approximately $190 million in 2013. We
cannot assure you that we will be able to achieve the level of operational savings that we expect. If our headcount
reductions are not effectively managed, we may experience unanticipated effects from these reductions causing
harm to our business and customer relationships. In addition, we are currently evaluating further facility
consolidations, and depending on the outcome of such evaluation, we may incur additional restructuring charges,
which may be material.
We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in
sufficient quantities and using competitive technologies, our business could be materially adversely affected.
We rely on third party wafer foundries to fabricate the silicon wafers for all of our products. We also rely on
third party providers to assemble, test, mark and pack certain of our products. It is important to have reliable
relationships with all of these third party manufacturing suppliers to ensure adequate product supply to respond
to customer demand.
We cannot assure you that these manufacturers or our other third party manufacturing suppliers will be able
to meet our near-term or long-term manufacturing requirements. For example, during the fourth quarter of 2011,
we experienced reduced supply of 45nm products from GF because of a manufacturing disruption that reduced
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