Dirk Meyers turn in the Henri Richard Sit-n-Spin

[turpit]

Dirk Meyer has a tough act to follow. Not that the previous act was good, it wasnt....they left Mr Meyer a $5.6billion loss to clean up.

Today he will stand in the spot once soiled by techno-incompetant Henri Richard. There he will address analysts in hopes of staving off further decay of AMDs reputation. While Mr Meyers is a proven performer and one of the true stars of AMD, his ascenion to his current position has come late in the game. With the current volitility in the market and the blood letting in the tech sector, even a glowing response from analysts may do nothing to help AMD .


http://money.cnn.com/news/newsfeeds/articles/apwire/9d7a0d6549a39759d82654dd11ebfe36.htm

Slumping chip maker AMD to detail new chip, outline factory spinoff strategy to analysts

NEW YORK (Associated Press) - The past few years have been disastrous for Advanced Micro Devices Inc., but the chip maker hopes to curry favor with Wall Street with a new line of server chips and a deal to spin off its factories


The Sunnyvale, Calif.-based company plans to give financial analysts more details of both efforts Thursday at a conference at its Silicon Valley headquarters. AMD has been out of favor with investors for nearly three years now, with a stock price that's fallen from above $40 per share in early 2006 to under $5 today.

http://money.cnn.com/news/newsfeeds/siliconalley/big-tech/2008_11_the_chip_that_must_save_amd.html



http://www.wired.com/techbiz/it/news/2008/01/tech_recession

The headlines in recent months bear a startling resemblance to those from early 2001: layoffs by the thousands, sickly financial outlooks and weak consumer spending. If the U.S. economy slips into a full-blown recession, tech companies could get hammered as consumer spending and IT spending abruptly grind to a halt, according to economists and analysts.

"Tech will crumble with the recession," says Paul Kedrosky, a venture capitalist and blogger. "Many tech companies -- like Apple, Google and Amazon -- are the most consumer dependent technology companies in the history of technology. Unlike prior recessions, consumer spending is going to heavily damage those companies. That's why you're seeing so much nervousness about Google and so much nervousness about Apple. It's not a good place to be."

The Chip That Must Save AMD


Advanced Micro Devices (AMD) stock stopped trading at $2.57 yesterday, down 13%. Only in November 2007, that price was $13.27. So today's news -- that the company is about to release a new chip named Shanghai -- comes at a particularly crucial time

 

[fazers_on_stun]

You know, JaydeeJohn is gonna accuse you of unfairly banging away on AMD now . You should devote some equal time to Intel-bashing...

BTW, Shanghai doesn't look bad at all - good improvement over Barcie according to the initial server reviews.

 

[Dekasav]

This isn't AMD bashing, and I'm sure everyone can recognize that.

AMD's position is grim, Intel's is better (though still not steady, what with the recession and all). But, I have faith in Dirk Meyers, so, I'm going to assume AMD will have a decently better Deneb, with a little IPC and a lot of clockspeed (hoping to see 3.6Ghz stock by 2H 2009).

Might be a good time to buy some stock.

 

[JAYDEEJOHN]

OK, this is all true, all stocks are dropping, and some more than others, like Intel has only lost 50% of its previous high, so even the huge corps are taken it in the shorts.

This isnt news, this is the current state of the economy. If people werent so concerned about thier favorite company on the stock market right now, and if we werent in this recession, this wouldnt be happening, and AMD, Intel etc would all be looking alot better.

Currently, you can buy a Shanghai chip thatll get you more than 20 some odd % better in Integer performance, where AMD has been doing badly. This wasnt so yesterday, and where the Nehalems? I can buy AMD right now, but not Intel? And whos made the most noise? This is plain silly . I dont see any 45nm Nehalem chips , does anyone else? AMD beat Intel to the trough.

So, whooped dee doo. None of this really matters, as both companies will survive this, and now, with allll the bellaching about AMD and their new partners, Ill ask it as common sensically as I can again, Do you believe AMD is in a better position with their partners than without? I think the answer is plain to see. Part of the reason thier stock is so low is because of the partnership, so weve already seen the negatives, now its time for the positives

 

[fazers_on_stun]

^ Actually both AMD and INTC are up at the moment. However, AMD as late as 1PM today had dropped more percentagewise than Intel - down to $2.35 - based on Intel's latest poor guidance for this quarter. Investors understand that AMD is much weaker than Intel, UAE partners notwithstanding.

As for buying a Shanghai chip, I know they are supposedly out today but I don't see any on Newegg - the ultimate test of availability . We'll see if any Nehalems are listed on Monday though.

 

[turpit]

You know, JaydeeJohn is gonna accuse you of unfairly banging away on AMD now . You should devote some equal time to Intel-bashing...

BTW, Shanghai doesn't look bad at all - good improvement over Barcie according to the initial server reviews.

Yup,

Shanghai does look good. But the global recession is hurting/going to hurt everyone. Some will be able to weather the storm better than others. Shanghai may turn out to be the best chip ever produced, it may not. One way or the other, it wont help help AMD if no one buys, just as i7 wont help Intel if no one buys. The difference is Intel has a lot more room to shrink than AMD does if the market crumbles.

 

[JAYDEEJOHN]

Actually, if the market crumbles, Intel has more to lose. Thatd be alot of fabs theyd have to mothball, compared to AMD. What Im saying is, if the market drops off dramatically, Intels has much more to do to survive than AMD, as the production wont be needed as ytou pointed out.

And when it all comes back, new players and old employees may try something different. If this IS all gloom and doom, these things can happen. Im thinking more like 6 to 9 months of slowdowns/readjustments, then itll pick up. Maybe IT wont get hit that hard, too early yet, as the pickup could chance real fast, faster than the slow down occurred

 

[fazers_on_stun]

Actually, if the market crumbles, Intel has more to lose. Thatd be alot of fabs theyd have to mothball, compared to AMD. What Im saying is, if the market drops off dramatically, Intels has much more to do to survive than AMD, as the production wont be needed as ytou pointed out.

And when it all comes back, new players and old employees may try something different. If this IS all gloom and doom, these things can happen. Im thinking more like 6 to 9 months of slowdowns/readjustments, then itll pick up. Maybe IT wont get hit that hard, too early yet, as the pickup could chance real fast, faster than the slow down occurred

True. But then there might be no AMD when the market does recover from a protracted recession. Abu Dhabi has deep pockets but even they have to be hurting in the current world economy, with oil under $60 a barrel. Why spend billions on building out fabs when the market is already overcrowded and profits are way down?

That said, AMD does put on an impressive Analyst Day - love to see all those shiny new roadmaps Glad to see Bulldozer retreaded and chugging along, if a year late.

 

[WR]

Currently, you can buy a Shanghai chip thatll get you more than 20 some odd % better in Integer performance

Indeed I can! I just have to pay >$750 for a 2.5 gig quad model and run it with registered DDR2 on a two-socket mainboard. And pray integer benchmarks (which I have not seen) mean something to me.

Release dates a few days apart - I don't care about. But as a consumer, Nehalem comes out before Deneb, and Penryn has been out a year. I've alluded to this release pattern. AMD puts out a processor first, but for a few months, it's server-only. Intel is releasing for the desktop on day 1, and servers will actually get it later this time.

This isnt news, this is the current state of the economy.

Bush is just preparing our economy to make Obama look really, really good in office.

 

[yomamafor1]

Actually, if the market crumbles, Intel has more to lose. Thatd be alot of fabs theyd have to mothball, compared to AMD. What Im saying is, if the market drops off dramatically, Intels has much more to do to survive than AMD, as the production wont be needed as ytou pointed out.

Actually not necessarily. Although Intel does have more fabrication plants to take care of, they also have much lower production cost than AMD, not to mention piles of cash in the bank vault.

So if recession continues to worsen, all Intel has to do is drop price, drop ASP, yet still retain a nice flow of income. If market really went to the gutter, they can still lay low and wait until the recession is over with their cash.

For AMD, they cannot simply wait it out like Intel. With 5.6 billion in debt, and their credit rating being dropped to B2s, its going to be very difficult for them to borrow money. So AMD needs to fight for survival in the winter, while Intel simply can just enter into hibernation (figuratively).

EDIT: now come to think of it, Intel is much more positioned to survive this winter than AMD. Currently all of the netbooks equipped with Atom are selling like hotcakes. This is not to mention the notebook market is still growing at an enormous pace. AMD on the other hand does not have a strong notebook platform, and does not even have a solution for netbook. So they'll have to rely on server space (which may be hard hit with the recession) and consumer space to survive.

AMD's road will be a very long one, to say the least.

 

[bydesign]

OK, this is all true, all stocks are dropping, and some more than others, like Intel has only lost 50% of its previous high, so even the huge corps are taken it in the shorts.

This isnt news, this is the current state of the economy. If people werent so concerned about thier favorite company on the stock market right now, and if we werent in this recession, this wouldnt be happening, and AMD, Intel etc would all be looking alot better.

Currently, you can buy a Shanghai chip thatll get you more than 20 some odd % better in Integer performance, where AMD has been doing badly. This wasnt so yesterday, and where the Nehalems? I can buy AMD right now, but not Intel? And whos made the most noise? This is plain silly . I dont see any 45nm Nehalem chips , does anyone else? AMD beat Intel to the trough.

So, whooped dee doo. None of this really matters, as both companies will survive this, and now, with allll the bellaching about AMD and their new partners, Ill ask it as common sensically as I can again, Do you believe AMD is in a better position with their partners than without? I think the answer is plain to see. Part of the reason thier stock is so low is because of the partnership, so weve already seen the negatives, now its time for the positives

Official release is scheduled for November 17th. Which once again will put AMD behind, a whole generation. They are just catching up with Harpertown which are 45nm so get your facts straight.

http://www.newegg.com/Product/Product.aspx?Item=N82E16819117149
http://www.newegg.com/Product/Product.aspx?Item=N82E16819117163

 

[fazers_on_stun]

^ I was going to mention that AMD screwed the pooch by not keeping up with Bobcat on their schedule a year ago, and just now have finally realized that netbooks are a hot market in a declining economy. So they are now betting on an underclocked K8 and their superior IGP to compete.

AMD - a year late and a billion short...

 

[yomamafor1]

You mean 5.6 billion short?

EDIT: BTW, if Intel did indeed bring 2P~4P Nehalem out next Monday along with Bloomfield, AMD is pretty much done for. Its a situation both AMD and Intel don't want to see. Therefore Intel wants to hold back on the button, and wait for AMD to grow back a bit, before dropping the bomb.

 

[roofus]

i cant imagine alot if server upgrades taking place with money so tight. server release first this time around could be devastating. most servers are bought on a 3 year, sometimes 5 year depreciation schedule and it your laying off front line employees, the business decision will come down to absolute need. Shanghai didnt turn the server CPU market upside down with any dramatic gaps from technology already churning away so it will be interesting. maybe there are companies that held off spending until fiscal Q2 just waiting for AMD.

 

[turpit]

i cant imagine alot if server upgrades taking place with money so tight. server release first this time around could be devastating. most servers are bought on a 3 year, sometimes 5 year depreciation schedule and it your laying off front line employees, the business decision will come down to absolute need. Shanghai didnt turn the server CPU market upside down with any dramatic gaps from technology already churning away so it will be interesting. maybe there are companies that held off spending until fiscal Q2 just waiting for AMD.

Concur.

However, for companies that are forced to upgrade or expand, or for new servers, Im sure one of the questions that will arise will be long term support. In AMDs current financial situation, one must wonder if they will be around 3~5 years down the road to provide upgrades or technical support. This may negatively impact present sales further aggravating AMDs situation.

 

[roofus]

true turpit. my manager isnt real tech-savvy but does follow the news. he wouldnt even allow me to order AMD desktops for that same (however irrational) fear.

 

[turpit]

UPDATE

From AMDs 13 November analyst day:

PCWorld

AMD entering mini notebook (netbook) segment of the mobile market:

AMD's processors for small laptops over the next two years will include dual-core and support for DDR3 memory, and varying amounts of cache. The first chip, code-named Conesus, will support 1M byte of cache and be released in 2009. Conesus will be followed by Geneva, which will support 2M bytes of cache and is due for release in 2010...............
AMD's confirmation quashes speculation that the company had abandoned the development of a low-power processor. Last year, AMD said it was working on Bobcat, a chip described by the company as "designed for maximum energy efficiency and performance-per-watt for next-generation mobile devices, scaling as low as 1 watt."

Fusion delayed:

The company has also delayed by two years its much-hyped Fusion laptop chip, which combines a graphics processing unit and CPU on a single chip. Originally due in 2009, the company now hopes to release a chip similar to Fusion in 2011. The new chip, code-named Llano, is targeted at mainstream laptops and desktops and will include four cores and 4M bytes of cache.........

Filling the void created by Fusion's delay are the dual-core Caspian and quad-core Champlain chips due for release in 2009 and 2010, respectively. Neither chips are projected to combine GPUs and CPUs on a single die.

Ontario and Orochi chips:

Other new chips for 2011 announced by the company include Ontario for ultraportables and small laptops and Orochi for high-end desktops. Chips will be manufactured using the 32-nanometer process starting in 2011, which could make them more power efficient than earlier chips, which will be manufactured using the 45-nanometer process.

Some more on AMD
EON


Suprising and potentially worrisome move from AMDs Chief Financial Officer: No change in Q4 estimated earnings.


Maintains fourth quarter outlook for now

CFO Bob Rivet said AMD isn’t cutting its fourth quarter outlook following Intel’s sales warning, but will provide an update on the quarter in early December.

Rivet said he debated what to say following Intel’s fourth quarter warning that sales would fall short of expectations, but thought it was premature given that AMD’s analyst meeting was focused on future plans. “We’re not going to change our guidance,” said Rivet. “There’s still plenty of time in the quarter. We’ll give you an update in early December.”

Simply put, Rivet won’t update AMD’s outlook until Dec. 4 when he speaks at a Credit Suisse technology conference. However, Rivet sounded partly optimistic that AMD, with its best line-up in a few years and an Asset Smart deal to unload debt, can grow faster than the industry

.


Its no secret Q4 is probably going to be abysmal and no suprise that companies are revising estimated earnings. It is suprising that AMD elected NOT to revise its estimates, leaving 3 options:
AMD is motoring along well and will meet estimates.........Franly, this is unlikely
AMD is unsure about where its headed this quarter.........Disturbing possibility.
AMDs revised estimates are so poor they are afraid to release them.......... Very disturbing possibility.

 

[turpit]

true turpit. my manager isnt real tech-savvy but does follow the news. he wouldnt even allow me to order AMD desktops for that same (however irrational) fear.

Similar to a self fulfilling prophecy; 'I dont know if these people will be in business in a few years so I wont risk buying their product.' If enough people say that, the company doesnt sell enough products, and they go out of buisness. Irrational or not...its a real factor.

 

[Just_An_Engineer]

Similar to a self fulfilling prophecy; 'I dont know if these people will be in business in a few years so I wont risk buying their product.' If enough people say that, the company doesnt sell enough products, and they go out of buisness. Irrational or not...its a real factor.

Disturbing and unfortunate truth. There are a substantial number of people who will only buy a computer if it has an Intel processor even if they know nothing at all about the processor itself. This goes all the way back to the 386 days when people were still insisting on buying i386 processors even though the AM386 processors were wiping the floor with them and were usually cheaper as well. The same thing went on during the K8 vs. P4 days. The fact is that Intel's marketing department is so good that they were able to convince the unwashed masses that their product was superior even during the times when it clearly wasn't. Realistically, AMD could come out with a processor that was 50% faster than what Intel was offering while costing half as much and they still probably wouldn't garner more than about 25% market share due to the entrenched belief among most consumers that Intel is superior.

 

[RetiredChief]

A couple of points not made yet.
AMD is not to far from the point of delisting (Which Circuit City comes to mind and shortly afterward filed ch 11), But then NT is still listed (@0.78/sh.

2nd point - Institutional investers tend to shy away from stocks under $5 (They may take current overall market decline into account. Again Nortel comes to mind, It's stock was staying around the $2 -> $3 /Sh, so they did a revearse split 10 -> 1 (That was when I caved and sold). That put them around $20 and they drifted back down.

 

[Just_An_Engineer]

A couple of points not made yet.
AMD is not to far from the point of delisting (Which Circuit City comes to mind and shortly afterward filed ch 11), But then NT is still listed (@0.78/sh.

2nd point - Institutional investers tend to shy away from stocks under $5 (They may take current overall market decline into account. Again Nortel comes to mind, It's stock was staying around the $2 -> $3 /Sh, so they did a revearse split 10 -> 1 (That was when I caved and sold). That put them around $20 and they drifted back down.

Good points. I'm not sure that the stock price can realistically be used as a gauge for the health of a company with the market being the way it is these days. Under normal circumstances you would expect good news about a company to result in an increase in demand for that company's stock, but that isn't necessarily the case these days. It seems that no amount of good news will have a positive affect on an individual stock if the stock market as a whole isn't doing well.

Taking today as an example, AMD released their Shanghai processors early to generally positive reviews and a report was released confirming that AMD had taken market share away from Nvidia. Both of these news items should have caused the stock price to rise, but in fact the price was actually way down for most of the day until the entire market picked up later in the session.

 

[JAYDEEJOHN]

Lowering the price on something that isnt being sold wont help. Having invertories 5x that of your competitor doesnt help. Keeping all that overhead is much more costly. Oil at 60$ a barrel is still within the oil companies having to pay for windfall tax hikes, just not so much as at 120$. Instead of 700 Billion dollars going out from the US, if it stays at 60$ a barrel, itll only be 3-400 Billion dollars, and thats just the US mind you. Does Intel have those kind of numbers? Or does it pale in comparison? Were talking alot of money here, not just a little Intel profit, even profit at a much smaller amount saved over the years. Just trying to keep perpestives here. I liken alot of this to chicken little, and have been hearing it for awhile, so IF it ever happens, those that claim all this doom and gloom may be right, but those that claim this doom and gloom wont be forgotten IF theyre wrong, trust me

 

[turpit]

A couple of points not made yet.
AMD is not to far from the point of delisting (Which Circuit City comes to mind and shortly afterward filed ch 11), But then NT is still listed (@0.78/sh.

2nd point - Institutional investers tend to shy away from stocks under $5 (They may take current overall market decline into account. Again Nortel comes to mind, It's stock was staying around the $2 -> $3 /Sh, so they did a revearse split 10 -> 1 (That was when I caved and sold). That put them around $20 and they drifted back down.

At their current loss rate, coupled with their Senior Note debt/due date barring the abu dahbi investment they have less then one year unless a drastic reversal occurs.

 

[turpit]

Lowering the price on something that isnt being sold wont help. Having invertories 5x that of your competitor doesnt help. Keeping all that overhead is much more costly. Oil at 60$ a barrel is still within the oil companies having to pay for windfall tax hikes, just not so much as at 120$. Instead of 700 Billion dollars going out from the US, if it stays at 60$ a barrel, itll only be 3-400 Billion dollars, and thats just the US mind you. Does Intel have those kind of numbers? Or does it pale in comparison? Were talking alot of money here, not just a little Intel profit, even profit at a much smaller amount saved over the years. Just trying to keep perpestives here. I liken alot of this to chicken little, and have been hearing it for awhile, so IF it ever happens, those that claim all this doom and gloom may be right, but those that claim this doom and gloom wont be forgotten IF theyre wrong, trust me

Jay, you are continuing to apply sharimoron logic "they have less to loose, therefore they cant losse as much, so they are better off"

While thats great for a fanboy blogger, it doesnt work in reality. Yes, Intel does have more overhead. They also have far greater capitol and assets.

To put this in perspective, In one quarter Intel will gross almost twice as much as AMDs current debt. You keep refering to AMDs "partners". AMD is not partnering with anyone. They are selling of capability. That is a desperation move, and like the goverment bailouts, it is a short term solution which only agravates long term problems.

What AMD and ATI have is more correcly termed "parnership". They work together towards a common goal by exchanging/complementing/integrating and implementing technology. The Abu deal is not a partnership. It is a bailout. Abu Dhabi is giving AMD nothing but money. Most of which must go to pay off AMDs debt, NOT advance AMDs technology. Where this applies to Intel is simple. Even if Intel was to loose everyone of its products sales right now, they could go on for several years, laying workers off and selling off assets while still maintaining a posive balance. AMD cannot. If AMD does not INCREASE its sales right now, it will bleed to death in less than 12 months. The Abu deal buys it an extra year or 2, but wont go beyond 2012.

People want to convieneintly ignor the 2.2 billion AMD owes in senior notes. Im sorry, but you cant do that. Senior notes are NOT like common stock. They have a due date, and they have a fixed value. Regardless of what happens to AMDs share values, regardless of any money AMD may or may not recieve, those Senior notes will come due, and they will come due to the tune of $2.2Billion. And, by definition, they have first rights to recompense regardless of AMDs sovlency or lack there of.

Please go look up Senior Notes and see how they work. You cant ignore them, and they arent going to go away.

Then go look and see how much Intel is in debt.

 

[JAYDEEJOHN]

I know about senior notes. I also know that 2.2 is way better than 5.whatever billion. Im not up on all this, but wasnt those senior notes always there? Before the partnership? Also, Id suggest you look up the term "silent partner", and see if it applies here.Sure, having everything owned and immensely profitable would be ideal, but thats not reality for AMD.

So far, how have we been told here on Toms about AMDs partners? Theyll pull out for profitability as soon as they can, if someone else wants a product done at the fabs, the partners will insist on someone elses access over AMDs. We are being told they arent partners because they dont bring anything but money into the equation, with a terrible cost. I ask what cost? No answers , other than, the partners wont help further, wont be patient and will screw AMD the first chance they get, just to make a profit. All these things have been said about AMDs partners. If I actually believed this garbage, maybe Id see it differently, but it is just that, garbage.

What I find most compelling here is, as AMD is about to release some nice competition, were getting this, AMD....OOOHHHZZZ NOEEEESS, theyre DOOOOMED, while at the same time, Intel releases a cpu that shows very litttle performance gains for the average user, and to alot of enthusiasts as well, and all at a higher cost. Well, since people pockets are emptier than before, that means that theyll have to spend less, so the more expensive (ala G200) new cpu will either have to come down in price (ala G200) or the OLD alternative (ala the G92) will have to hold the competition off, but meanwhiles... OHHH NOEEES AMD is DOOOMED, sure keep it up, some one may just believe it