AMD delivered the news Thursday as it announced financial results for the quarter. Its revenue slumped 26 percent from this time last year to $1.03 billion, and its net loss increased to $180 million, the company said.
AMD paid $334 million to buy SeaMicro, which had developed a new type of high-density server aimed at large-scale cloud and Internet service providers.
The purchase was made under former CEO Rory Read, and has now been reversed by Lisa Su, who took over the CEO job last October.
AMD said the move is part of its effort to "simplify and sharpen" its investment focus. As a result, it is taking a charge of $75 million.
The news sent its stock down 8 percent in after hours trading, to $2.63.
AMD executives are expected to discuss the decision in a conference call Thursday afternoon.