Advanced Micro Devices Inc. (NYSE: AMD) reported third-quarter 2014 earnings after markets closed Thursday. The chipmaker posted adjusted diluted earnings per share (EPS) of $0.03 on revenues of $1.43 billion. In the same period a year ago, the company reported EPS of $0.04 on revenues of $1.46 billion. Third-quarter results also compare to the Thomson Reuters consensus estimate for EPS of $0.04 on $1.47 billion in revenues.

The big news was that the company will fire 7% of its workforce (about 700 people) and get rid of some of its real estate as AMD tries to improve its profits and its prospects for long-term growth. The company will take a $57 million charge in the fourth quarter related severance for the fired employees and further $13 million charge in the first quarter of 2015 primarily related to real estate actions. AMD expects operational savings of $9 million in the fourth quarter and $85 million in the 2015 fiscal year.

The company’s new CEO, Dr. Lisa Su, said:

AMD’s third quarter financial performance reflects progress in diversifying our business. Our Enterprise, Embedded and Semi-Custom segment results were strong; however, performance in our Computing and Graphics segment was mixed based on challenging market conditions that require us to take further steps to evolve and strengthen the financial performance of this business. … While decisions that impact the size of our global team are never entered into lightly, this is the right step to ensure we prioritize our resources and engineering investments in our highest-priority opportunities that can drive improved profitability and long-term growth

The company said it expects fourth quarter revenues to fall by 13% (+/-3%) sequentially. Analysts were expecting $1.48 billion for the quarter. A sequential drop of 13% leaves revenues at about $1.24 billion. AMD can’t layoff enough employees to make that look good.

AMD’s shares dropped about 5.3% in after-hours trading Thursday to $2.50, below the stock’s 52-week range of $2.54 to $4.80. The consensus target price for the shares was around $3.90 before the report.

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