Well, at least that $200M was the final payment for the 2012 WSA penalty and should not be factored into 2014 cash flow performance. Now it's breakeven to $50M loss, but includes the extraordinary cost to redeem and rotate their debt forward. With the poor performance since, it really looks like they got a good deal on those bond issues.
AMD results breakdown is like that:
Gross revenue....... 1.429MM
Gross Margin......... 35%
Gross profit........... 494MM
R&D..................... 278MM
SG&A................... 150MM
interest expenses.. 46MM
(I'm using 46MM for interests since this is the Q4 forecast)
AMD basically needs 474MM to cover its basic expenses, R&D, SG&A and interests. Today it basically generates a few million here or loses a few millions there, it's more or less stable. But what happens if they take a 13% drop in revenue, 1.243MM with 35% gross margins?
Gross revenue....... 1.243MM
Gross margin........ 35%
Gross profits......... 435MM
AMD only has 435MM to cover its basic needs, but it needs 474MM. They go from generating small sums of cash to burning cash, 40MM per quarter, 160MM per year. Add Q1 and Q2 seasonality and 200MM in cash outflows seems reasonable. This is why the results were bad, quarterly results were fine but the forecast is anything but good.
But since AMD is cutting 7% of its workforce, saving about 21MM per quarter, that gap shrinks a little to roughly 20MM per quarter, but again we should add the traditional seasonality in Q1 and Q2. Given that AMD has nothing good on the 2015 pipeline, it's safe to say that 2015 will be a very long year for AMD. They have to chose between firing more personnel (another 10-15%) or will burn precious cash to survive in 2015.
But there's an interesting bit about the latest round of cuts. AMD is firing about 7% of its workforce, if 100% of it is SG&A then it's about 13% of its SG&A force. If marketing and sales bear the brunt of the cuts, we should be talking about cutting above 25% of its sales and marketing force. I can't think of cuts of this order or magnitude if the executive management wasn't planning to shift the company to other markets that demand smaller sales effort or if management wasn't forecasting sales to stay at a much lower levels than in previous quarters.