ExtremeTech asks, "How can AMD be fixed?"

BaronMatrix

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Over at Extremetech, they have a nice interview with several analysts regarding AMD's future. It was about as upbeat as a real impartial look could be though there were the usual faux pas' you always see in tech analysis by non-techies.

Probably the most interesting quot was the last by Mercury Research.

But Peddie and the others maintain that AMD's recent troubles are mainly just a glitch, part of the normal volley between the two companies. So how long will it take for AMD to get back on its feet? Measured in terms of the bottom line, Peddie says it will probably take the company the rest of this year to get everything sorted out in terms of becoming profitable again.

"Intel has succeeded in bloodying AMD's nose," Peddie said. "But it's not a knockout punch, and it sure as hell isn't a killer punch."



Now we hear it from "the horse's mouth" and can leave the doom and gloom out.


Linkage![/quote]
 

JCon

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Good article... They made it clear that AMDs problems were management related. Bad expansion plans, poor cash flow, and a terrible marketing campaign...

So now that they've solved those problems by replacing all the top management things should turn around!

Who is the new CEO?
 

BaronMatrix

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Good article... They made it clear that AMDs problems were management related. Bad expansion plans, poor cash flow, and a terrible marketing campaign...

So now that they've solved those problems by replacing all the top management things should turn around!

Who is the new CEO?


That's a slightly obtuse view of the three pages I read. I live in NYC and I see enterprise ads everywhere for Opteron. There is even the infamous ticker in Times Square that boasts how much money is wasted not using Opteron.

The biggest problem was the price drops. I said it about Intel and will say it about AMD. If your chips are selling for less, you're making less. We'll see how Intel's QoQ and YoY numbers look like soon.

Anyway, now hopefully we will stop calling the CH11 police.
 

JCon

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From the article...

"They really went out and took too much share too quickly – they tried to get too big too fast," he said. "If you look at other major share battles – like Toyota's market share in the U.S. – most companies take it very slowly. They [Toyota] took 10 years to double their share. If AMD had taken the same approach, they might be in a very different position today."

Freedman also sees AMD's current financial woes as directly tied to what he described as a marketing effort that is "defunct and devoid of all logic and reason."

It's good to have OEM presence," McCarron said. "But because the Dell deal came on so quickly, it was disruptive to [AMD's] channel business. AMD pulled product out of the channel, and customers weren't happy. That created an inventory bubble, and that, in turn, led to people not buying as many processors in the first quarter."

Those are all management mistakes. AMD makes awesome chips, and ATi makes awesome GPUs. However when management is making such large fundamental mistakes there is no reason to be optimistic in their future performance.

Rely on the tech, replace the execs!
 

dragonsprayer

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When someone (or in this case some company) screws their best customers (amds long term partners) to go into bed with their enemy (dell) they usually take a long time to forgive them.

So amd is bribing them with ultra low pricing? Will they go back to amd?

AMD multiple mistakes may not be recoverable . can you say IBM-amti = IBMDTI said i b m (pause) d t i
 
Uh, yes they are recoverable. AMD's stock price has gone as low as $5 a share, and yet they still exist. The price war has put them deep in the red, but AMD is used to operating in these conditions. Its business as usual.
 

gr8mikey

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Over at Extremetech, they have a nice interview with several analysts regarding AMD's future. It was about as upbeat as a real impartial look could be though there were the usual faux pas' you always see in tech analysis by non-techies.

Probably the most interesting quot was the last by Mercury Research.

But Peddie and the others maintain that AMD's recent troubles are mainly just a glitch, part of the normal volley between the two companies. So how long will it take for AMD to get back on its feet? Measured in terms of the bottom line, Peddie says it will probably take the company the rest of this year to get everything sorted out in terms of becoming profitable again.

"Intel has succeeded in bloodying AMD's nose," Peddie said. "But it's not a knockout punch, and it sure as hell isn't a killer punch."



Now we hear it from "the horse's mouth" and can leave the doom and gloom out.


Linkage![/quote]

This wasn't from mercury research the above comment was from Jon Peddie of Jon Peddie research (whoever he is) and I would harldly call him the horses mouth.

The truth of the matter is that AMD is in the doghouse financially. They tried to do too much too fast and are now paying dearly for it. Cutting capex is not the answer to staying competitive with intel long term. Each process node gets ever more expensive. If you get too far behind on process tech when you are up against intel you are screwed.

Also we can't forget about intel's very agressive upcoming pricecuts. They are already selling their flagship X2 6000 for under $300 and K10 is 2 - 3 quarters too late to save them.

I don't think chapter 11 is definite at this point, but it is a very real possiblity. I say greater than 50% chance they do chapter 11 and recapitalize. At some point if things don't turn soon, it would be in their best interest.
 

epsilon84

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wats chpt 11?

It comes after chapter 10... :lol:

Seriously, it means the company is going bankrupt.

In regards to AMD, K10 can't come soon enough. As long as it's released according to schedule, AMD should be OK. Volume will be low in 07, so I don't expect any miracle turnaround this year. 2008 should be a better year for AMD, unless Intel Penryn outperforms K10 comprehensively, which I doubt. Nehalem, on the other hand...

Theres no stopping for breath in this cutthroat business...
 

Slobogob

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Those are all management mistakes. AMD makes awesome chips, and ATi makes awesome GPUs. However when management is making such large fundamental mistakes there is no reason to be optimistic in their future performance.

Rely on the tech, replace the execs!

I don´t think so. Comparing the car industry with the computer industry is like comparing the eating habits of a christian farmer and a big town crack junkie. Both are humans, but that´s it.
Growth is one of the most important things for a corporation. I´m quite confident that a car is used at least three times as long as an average CPU - and that´s a pretty conservative estimation. I can buy a 15 year old car and it will do fine. I can´t run a 15 year old CPU though. It won´t do Windows XP and i have my doubts that i can even find a mainboard for it.
Calling AMDs move to grow a mistake is wrong. It was risky so i´d call it a gamble.
 

ajfink

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When someone (or in this case some company) screws their best customers (amds long term partners) to go into bed with their enemy (dell) they usually take a long time to forgive them.

So amd is bribing them with ultra low pricing? Will they go back to amd?

AMD multiple mistakes may not be recoverable . can you say IBM-amti = IBMDTI said i b m (pause) d t i

Please. AMD never pissed off its other big partners - just retailers. If anything HP was getting the very first shipments (and still is) rather than Dell.
 

sailer

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given the choice of peeving the big guys or the little guys, they chose to make the little guys mad.

In short, they did the very thing that Baron cites as the reason he won't buy Intel... they didn't play nice.

Jack

Some of the things that Intel did years ago was why I first turned to AMD. But AMD has spent much of the last year peeving me off. So who would I buy from now if I didn't want to deal with a company that hasn't peeved me? Cyrix. Some other? Now wait, are they even in business at all anymore?

Though I have some sympathy for AMD and even hope that their next cpu series is good, along with the R600 video card, so I can buy them and feel like I got my money's worth, they need to produce the product. If they keep stalling, it won't just be people like me who loose the faith, but the big OEM's will turn away as well. Trying to sell last years technology in next year's marketplace won't work.
 

JonnyDough

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My guess is that there would be a host of large corporations that would donate to AMD to keep them afloat. Not only that, but it's likely a court would make the decision to try to protect AMD as well despite their sinking ship, just to avoid having Intel as a free-running king. An investment in the processor competition would be worth a multi-billion dollar corp's while to keep Intel from raising prices. Don't forget that for a company that runs thousands of processors, it's worth it to replace them every few years, regardless of cost - just to keep energy costs down. Running processors that use a lot of energy and produce a lot of heat costs a fortune, both to run them and to cool them (air conditioning), so if the processor manufacturing becomes monopolized it's not just bad news for us who buy one...but bad for those big companies that buy thousands too. They won't want to pay twice as much per proc just because there's no competition for Intel. I'm not saying that companies would come out of the woodwork and invest in AMD, I'm saying it COULD happen.

Plus, there's a ton of guesstimation as to what AMD has brewing, and how they'll fare. For the average home user who doesn't own AMD stock, it doesn't matter all that much. Once quad and eight cores hit the shelves at under a grand, we'll be good for awhile anyway.
 

BaronMatrix

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This wasn't from mercury research the above comment was from Jon Peddie of Jon Peddie research (whoever he is) and I would harldly call him the horses mouth.

The truth of the matter is that AMD is in the doghouse financially. They tried to do too much too fast and are now paying dearly for it. Cutting capex is not the answer to staying competitive with intel long term. Each process node gets ever more expensive. If you get too far behind on process tech when you are up against intel you are screwed.

Also we can't forget about intel's very agressive upcoming pricecuts. They are already selling their flagship X2 6000 for under $300 and K10 is 2 - 3 quarters too late to save them.

I don't think chapter 11 is definite at this point, but it is a very real possiblity. I say greater than 50% chance they do chapter 11 and recapitalize. At some point if things don't turn soon, it would be in their best interest.


i think your avatar symbolizes your desire to bait and not DEBATE. Peddie works for Mercury Research. Are you obtuse and lacking in reading skills? It was only 3 pages.


I mean I even HIGHLIGHTED their opinion about CH11.

I guess DOOM and GLOOM is all you can muster.
 

rationality

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I don't think chapter 11 is definite at this point, but it is a very real possiblity. I say greater than 50% chance they do chapter 11 and recapitalize. At some point if things don't turn soon, it would be in their best interest.

People always throw around the concept of declaring bankruptcy like it's something a company can do on a whim - "hey, let's declare bankruptcy and stop paying our creditors - that will make our cash flow problems disappear". It should be pretty obvious to everyone that the board of directors of a company actually has duties to the current shareholders - the question isn't "would bankruptcy be good for amd", it's "is there no way for AMD to avoid going bankrupt". Directors can't simply chose to screw current shareholders - they have to be forced to do it as a result of a lack of alternatives. Unless you honestly believe that AMD can't raise capital at any price there is no way you can believe that there is a greater than 50% chance of AMD going bankrupt. Obviously shareholders would prefer a dilutive equity issuance to being wiped out in bankruptcy - there are clearly investors that would buy equity at a low price. Unless Barcelona is a total dog, talks of bankruptcy are at least a couple of years premature (probably a couple of years premature even if it is a dog).

My guess is that there would be a host of large corporations that would donate to AMD to keep them afloat. Not only that, but it's likely a court would make the decision to try to protect AMD as well despite their sinking ship, just to avoid having Intel as a free-running king. An investment in the processor competition would be worth a multi-billion dollar corp's while to keep Intel from raising prices.

There are no large corporations that will "donate" to AMD. That sort of move is totally unprecedented and would lead to all sorts of shareholder suits against the Company making the donation. There might be large corporations willing to invest in AMD- no way to know that although it wouldn't be that surprising. No court will enter a decision to try to protect AMD just to stop Intel from being a free-running king - the law simply does not work that way. Antitrust laws exist to ensure fair competition but they don't artificially buoy one competitor just to stop another competitor from knocking them out - if AMD disappeared and Intel was eventually shown to be a monopoly the legal antitrust remedy would be to break Intel apart (note that even with AMD gone this wouldn't be likely for a variety of reasons).
 

gr8mikey

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i think your avatar symbolizes your desire to bait and not DEBATE. Peddie works for Mercury Research. Are you obtuse and lacking in reading skills? It was only 3 pages.


I mean I even HIGHLIGHTED their opinion about CH11.

I guess DOOM and GLOOM is all you can muster.

Before attempting to flame my reading comprehension, you probably better go back and read the article again yourself.

There were several analysts quoted in the article. They are as follows:

Jon Peddie of Jon Peddie Research
Joe Osha of Merrill Lynch
Dean McCarron of Mercury Research
Doug Freedman of American Technology Research

Jon Peddie made the comment you quoted.

When I see that balance sheet on earnings release day, I will be happy to discuss it with you so that you may understand that AMD does indeed have some very real financial problems.
 

gr8mikey

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Shakiraboob believes Intel will go BK in Q2 of 2008 --- but I don't see how that can happen when Intel continues to operate in the black. However, BK in Q2 2008 for AMD is not outside the realm of possibility -- I always laugh at this ... oh, the irony. ;)

Jack

I find it very funny that we are now 2 quarters past where he predicted "massive operating losses for intel" yet he does not revise this 2Q '08 prediction. The anticipation is already building for me to see how he reacts when 2Q '08 comes and goes and intel is still with us.

Or better yet if AMD has to file bankruptcy,
It would be interesting to see how he would spin that one.
 

epsilon84

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Shakiraboob believes Intel will go BK in Q2 of 2008 --- but I don't see how that can happen when Intel continues to operate in the black. However, BK in Q2 2008 for AMD is not outside the realm of possibility -- I always laugh at this ... oh, the irony. ;)

Jack

I find it very funny that we are now 2 quarters past where he predicted "massive operating losses for intel" yet he does not revise this 2Q '08 prediction. The anticipation is already building for me to see how he reacts when 2Q '08 comes and goes and intel is still with us.

Or better yet if AMD has to file bankruptcy,
It would be interesting to see how he would spin that one.

LOL, I like the part where he says ALL C2Ds will be under $100 once K10 is released. :lol: :lol: :lol: :lol: :lol: