Breaking - AMD Warns!

How are they going to keep up with Intel by cutting Capex?? Changes to "operational model" may mean they are going to shift focus to a profitable co-existence... just my speculation.

Like barnacles on a whale.

"Abit"? It will be closer to double that concensus number. There was little savings from marginal cost of production associated with that lower revenue, it was simply a product of lower prices on their production. Thus, most of that lowered revenue will be coming straight off of AMD's bottom line, minus whatever whatever expenses they managed to cut last quarter.

Wall Street already knew what crap this quarter was going to be, that's why AMD's stock has been falling relentlessly. This is AMD management's first acknowledgement that they are in deep **** and can't just continue like all was fine and dandy. It is also a must before any equity offering. No one is going to throw money into a hole unless there is a plan for plugging that hole up. That said, I think AMD is going to find raising money a lot harder than they had anticipated, this may also be an acknowledgement of that as well.

Short covering. Once the news like this breaks, if you are short the stock, you go ahead and cover on the news and lock in your profit. Don't expect this to be a trend reversal as Q2 is probably gonna be even worse (seasonally slowest quarter with more pricecuts on the way.)

I imagine that the cut in CAPEX will translate directly to a delay in the 45nm node transition. They're probably putting off the purchase of the expensive immersion lithography tools etc. Personally, I think 2008 may continue to be a bloodbath for AMD as Intel ramps 45nm quad cores and AMD is stuck with large 65nm dies because they can't afford to transition.

1.5B to 1.2B is a pretty big cut in revenue, and that's down from 1.6-1.7B estimate from the street. remind me again why they acquired ati?

to paraphrase:

alas poor AMD! I knew him, Horatio

While you got some correct ideas, be careful not to convince yourself of something. The market makes a hash outta all the ideas about what is supposed to happen.

My thoughts - the slashing of the capex and "restructuring" probably means that AMD is finding it very difficult to secure additional financing.

We won't know till the conference call what the cash flow was for the quarter... like I've said before, I'm waiting for that call before assessing an investment strategy.

Deadcat bounce??? Short Covering??? Buyout??? meh...

Twisted,

Be careful of claims of "cash on hand"... Many companies tout this number as a "Hey we are still healthy" but it normally means they are on the ropes financially. Please reference MCI prior to filing for bankruptcy and declaring +11B in fraud.

If AMD continues to bleed expect one of two things to happen:

1) AMD to restructure under bankruptcy while shedding a LOT of debt. Emerging as a stronger company with a better defined "Laser like" vision.

2) AMD to entertain offers from courters. This will likely only pad financials for a short time which will likely lead BACK to number 1. The only way for this to NOT end up in category 1 above is for the purchasing company to do a GREAT job restructuring without/before bankruptcy.

Heed my words "Cash on Hand" statements are a true sign of weakness when a company has multiple declining quarters like have just been stated.

But do not fear AMD will be around and will still compete (just their financials will not be able to compete for a while).

I'm thinking they're heading towards Chapter 11... just awaiting the conf call to see how fast cash is draining. Restructuring actually COSTS money short term (e.g. severance, lower productivity) - so the effects may not be so dramatic during this "survival phase".

I also agree with you, the capex cuts is a move of utter desperation. It may help them survive another few quarters, but at the cost of being obsolete with Intels very aggressive "tick/tock" strategy.

If the earnings call is poor, I'd go short (probably with LEAPS). If it's good, I'd have to assess whether the stock will stagnate or appreciate.

The only wildcard is a white knight...

BTW - Intel is up 3% as well. Seems to be more of a sector move than AMD specifically.

Maybe the "changes" to business model have The Street believing that the price war will ease and margins will improve for all chip makers.

The Fact is that they are Losing money. They lost money in Q4 (even excluding the ATI acquisition costs), they lost massive amounts last quarter, and things sure don't look good for Q2.

At least AMD's management is starting to show at least some sign of waking up to the danger. That is more than can be said for you...

Fanboi.

I imagine that the cut in CAPEX will translate directly to a delay in the 45nm node transition. They're probably putting off the purchase of the expensive immersion lithography tools etc. Personally, I think 2008 may continue to be a bloodbath for AMD as Intel ramps 45nm quad cores and AMD is stuck with large 65nm dies because they can't afford to transition.

AMD is locked into an agreement with the IBM alliance when it comes to their technology development investment. Thus, the availability of 45nm will not be affected by this cut. However, their ability to get designs ready in time for 45nm may be compromised.

I am concerned with this more.

http://www.amd.com/us-en/Corporate [...] 05,00.html

That means that Intel is gaining back market share from AMD.

This agreement only relates to the development of the process and makes it available for AMD to use in their fabs without having to pay a license fee. It does NOT mean that AMD won't have to pay for re-tooling the fabs. Unless IBM or another company bails AMD out by actually purchasing the tools for them, AMD will have to foot the bill before 45nm comes on-line. I believe the $500MM cut in CAPEX involves postponement of some of the re-tooling. Other possibilities are delayed groundbreaking of the NY fab, delayed R&D for 32nm, etc. What else could it be?

[quote="Jesus_My_Saviour"]

If you say so...
I really hope that when you die, you won't tell him that "you didn't believe because someone told you that he was dead". That would be too late then.

'What ifs' and 'I hopes'... typical rebuttals from the faith based. Throw a fact my way and I will entertain a response, but there is no place in debate for your tactics.

Bah, how did I get stuck in a religious debate on a hardware site.

Anyway back to AMD. The outlook does look bad for investors, but the company has too much profit potential to just abandon, as long as they don't get too far behind the curve trying to solve their current woes.

All of those links pre-date today's warning and I believe AMD will change their plans and postpone 45nm deployment. Their co-development of the technology with IBM only ensures that they can utilize the process without having to license it. The CAPEX requirement for re-tooling is not eliminated. The bottom line is AMD doesn't have the cash to do it unless they cut spending in other areas such as capacity, which they indicated will not be affected. So what else can it be? R&D for 32nm is another possibility, but $500MM is an awful lot and I'm sure includes more than R&D. It includes hardware, equipment, etc.

00,

Here let me try talking to you this way.

A little challenge. Since you seem to be the show me type... How about taking the time to give Lee Strobel a read.

In particular: The Case for Faith. (a short and quick read)

It will answer many of those question which you can pose to the likes of me.

If you still have questions for me I will gladly respond.

I doubt that.
AMD/IBM would be the first ones to use immersion lithography in their process. AMD has this cover up.
Check these links out:

IBM to roll out 45-nm immersion process by end of year

AMD, IBM Talk Immersion, Low-K at 45nm

AMD Describes Road to 45-nm Processors

LITHOGRAPHY: AMD preps to take immersion plunge at 45 nm

You need to learn how to read. Seriously. Instead of taking one sentence out of context, try reading the whole post, which is a whole three sentences.

I stated that they were working in the IBM alliance and would not have technology development affected. The sentence you decided to parse out and respond to was alluding to the possibility that they might end up making cuts that would affect design development, delaying their utilization of 45nm despite having the benefit of technology development with IBM and having Chartered available within that alliance.

I will give it a read, but in exchange you must read one of these two...

Sam Harris "The End of Faith" or Richard Dawkins "The God
Delusion"

Hi - Happy Easter... ok, now to respectfully disagree with you:

Plenty of large companies go Chap 11. Of them, many survive and even thrive... but the orginal stockholder gets wiped out. AMD's financials and market postion are big red flags / leading indicators.

No, this is not accurate. Sorry, but they now have a pile of debt, merger complexities, aggressive Intel and Nvidia offerings, and no immediate product savior that can sustain them.

Rebutted by someone else. You will see, come April 19th, just how much "profit" AMD made in Q1. I'm guessing I have more money in the cupholder of my car than all of AMD in Q1.

They need to clean out the stuffed channel, compete with superior Intel C2Ds, and desperately generate cash. Price cuts are their only option.

Who am I lying to? Let's not get testy, it's very unbecoming for a person with your screen name.

Intel is going to outpace their technology. One way to drive someone out of business, without *predatory prices* (debatable anyhow)... is to offer the same prices for vastly superior products. Intel's accelerating their product cycle and it will be hard for AMD to spend the $$$ to keep up.

AMD is up 5% also.

Yes, hence my post. AMD was up by 5% as other posters mentioned. So I brought up the fact that Intel is also up by 3%. Read the comments.

I actually think this the 2nd quarter (April => June) will be the worst for AMD.

Until now AMD had held up pretty well in the sub $200 cpu range beacuse they really had no intel chips out against them.

I am mainly a network admin guy (it's my full time job) but I more or less by accident sell maybe 200 computers a year to friends co-workers, etc who ask for my help/advice.

First quarter I sold a lot of systems with x2 3800 to x2 4600 chips in them because they were a better deal than the Intel parts at the same speed.

At the upper mainstream to top end, say Intel E6600 or better, AMD just is not in the game, but most of the "game" is in the sub $200 range.

With Intel releasing the E2xxx series this quarter and FINALLY killing off most of the netburst stuff, intel is FINALLY fully engaged in the sub $100 range with the E2xxx series, and the $100 to $200 range is very tight as well with the E4xxx and lower priced E6xxx chips coming down.

For the last 9 months Intel has owned the high end, and made huge gains in the server space, but the low to mid has still been AMDs playground as Intel was still wallowing under the burden of the Netburst stuff.

With Netburst finally killed off, it is now an all fronts war between Intel and AMD, and I suspect a difficult quarter lies ahead for AMD.

In 3rd Quarter AMD releases Barcelona and we will see what we see.

If Barcelona rocks we have a new ball game, if it does not, we are back to the pre-athlon days when AMD was a 2nd tier alternate supplier at the lowest end of the market.

In Q4 we get Intel's Penrym, and we shall again see what we see.

There is irony in this quote...