AMD lowered its forecast for first-quarter performance today and announced that it intends to cut approximately 10 percent of its workforce (1,600 to 1,700 workers) by the end of the third quarter. The company said that it expects first-quarter revenue to come in at $1.5 billion. That's a healthy 22 percent increase compared to Q1 2007, but is still 15 percent lower than the fourth quarter of 2007. Previously, AMD had been expected to report first quarter revenue of approximately $1.6 billion dollars.

Wider Phenom availability, new ATI HD 3000-series cards, and price cuts for the Radeon HD 3850 and HD 3870 were evidently unable to stem the company's losses, and AMD says that the revenue shortfall is due to lower-than-expected sales across all market segments. The company will release additional financial data and information on market segment performance when it reports its quarterly results on April 17.

There's at least some reason to think AMD's second quarter may be better than its first, thanks to a stronger product mix. B3-based Phenoms and triple-core processors should both be widely available in-channel through most of the quarter, and the 780G chipset, which launched in the middle of the first quarter to strong reviews, is the obvious platform of choice for either processor. AMD has already stated, however, that it intends to take an undetermined restructuring charge in the second quarter, which could potentially put quite a dent in the company's earnings for that period.

AMD gave no guidance on how its revenue shortfall and job cuts will affect either its next-generation 45nm Shanghai processor or Hector Ruiz's much-publicized plan to return AMD to profitability by the second quarter of this year. Today's announcement isn't particularly surprising—bad news from AMD in general is no longer surprising—but the company's eggs are increasingly lying in a single code-named basket. All current information suggests that Shanghai's development is going well, but returning to competitive status may require a performance leap of Athlon XP-to-Athlon 64 proportions by the time the processor actually ships. Such jumps are not impossible, but reports like this only serve to increase the pressure on AMD's next-generation production team.