AMD yesterday said it plans to lay off 10 percent of its work force in an effort to cut costs.

AMD currently has 16,800 employees worldwide, said Drew Prairie, an AMD spokesman.

"It's an action that will help create a better cost structure and help us return to profitability," Prairie said.

The layoffs will take place across business units around the world by the third quarter of 2008, he said.

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As a result of the layoffs, AMD expects to take a restructuring charge of an undetermined amount in the second quarter of 2008.

The company also lowered its revenue expectations for the first quarter of 2008, which is "due to lower than expected sales across all business segments," it said in a statement. AMD is predicting quarterly sales of $1.5bn, a 22 percent increase compared to the first quarter of 2007.

Analysts polled by Thomson Financial originally predicted net revenue of $1.61bn.

The company will address these issues further on April 17, when it announces financial results for the quarter.

AMD has been struggling since acquiring graphics vendor ATI in 2006, reporting five consecutive quarterly losses due mostly to charges connected with the acquisition. AMD reported a net loss of $1.772bn in the fourth quarter of 2007, which was higher than revenue of $1.770bn. The net loss included charges of $1.675bn mostly related to AMD's acquisition of ATI in 2006.

During a conference call announcing the fourth quarter results, AMD Chief Financial Officer Robert Rivet said the company hopes to return to profitability by the second quarter of 2008.