AMD's new CPU architecture is a complete, utter and total failure. Only the most dyed-in-the-woll fantard would claim otherwise. In fact the new architecture cores are so bad, that as of Q3, 2012, CPUs featuring the tired, half-decade-old Stars core architecture actually outsold chips using the new Bulldozer and derivative architectures. If your old products based on 6 year old designs outperform and outsell you newest products, it's amply clear that you've failed on a massive scale.
This epic design and execution failure on the new cores has left AMD in a major pickle. Intel marches on, gobbling up market share at AMD's expense on the back of its flawless 22nm Ivy Bridge launch. Sandy Bridge was more than enough gunpowder to blow all AMD architectures; Stars and Bulldozer, to dust, and Ivy Bridge is aimed as a killing blow. Because AMD's x86 products are now two-to-three generations behind they are not selling. Last quarter AMD had to send APU inventory to landfills because they couldn't sell them. AMD's revenues fall consistently 10 to 13% per quarter. Margins dropped by fifteen points in a single quarter. AMD loses 2 points of market share every quarter. And this is in lines responsible for 90% of its revenues.
Here's AMD's dilemma. With revenues in freefall, AMD must cut costs. It simply isn't generating enough cash to cover expenses. But due to the failed Bulldozer generation of products, AMD is looking at a $2 billion "do over" bill. To make matters worse, AMD has no way of cutting current expenses because all of its major expenses are tied to extenuated commitments. In six months it has incurred 3/4 of a billion dollars in restructuring penalties (expenses) in favor of GF. Long term this lets AMD curb fabrication expenses (after all, why make what no one wants to buy?), but those longer term savings come at a huge immediate cost at exactly a time where AMD needs instead to be spending to fix its broken CPUs. Employee severance costs are similar. The bloodletting saves payroll and benefits expenses in the future, but generates massive immediate costs now (almost $400 million of extra expenses so far).
So AMD has elected to burn up all of its cash now to reduce its running costs in the future, at the expense of ignoring its failed products. This is a very bad move IMO. Revenues are falling much, much faster than AMD can curb costs. The massive expenses AMD has incurred have prevented AMD from addressing the real root problem - LOUSY CHIPS! So long as the chips remain lousy, no amount of cost cutting will stop AMD's decline.