backtop


Print 92 comment(s) - last by Targon.. on Jul 31 at 4:24 PM


Robert J. Rivet, AMD Executive Vice President and Chief Financial Officer  (Source: AMD)
Just a day after Intel's Q2 performance report, it's now AMD's turn

Yesterday, DailyTech reported on Intel's Q2 earnings. The company posted Q2 revenue of $8.7 billion USD, operating income of $1.35 billion USD and net income of $1.3 billion USD.

Today, it's archrival AMD's turn with regards to financial performance for the quarter. AMD recorded revenue of $1.378 billion USD, an operating list of $457 million USD and a net loss of $600 million USD.

This compares with revenue of $1.216 billion USD and operating income of $102 million USD for Q2 2006.

"While we made solid progress in the second quarter across a number of fronts, we must improve our financial results," said AMD CFO Robert J. Rivet. "We achieved a 12 percent sequential revenue increase, improved the gross margin and won back microprocessor unit and revenue market share."

AMD appears to have worked out problems that it had in late 2006 with OEM/channel processor distribution and attributes 38 percent sequential increase in microprocessor unit shipments to orders from Toshiba, an increased adoption of AMD-based platforms and strong initial sales of the ATI Radeon HD 2000 graphics family.

"We continue to focus on realigning our business model and reducing our capital expenditures and cost structure in the second half of the year," said Rivet.



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

Encouraging
By Warren21 on 7/19/2007 5:49:56 PM , Rating: 4
It's good to see that their revenues are increasing QOQ, even if they reported such high losses; their business is increasing.




RE: Encouraging
By KristopherKubicki (blog) on 7/19/2007 5:59:16 PM , Rating: 4
Q2 is traditionally the weakest quarter for the semiconductor industry.

Often -- though I'm not saying AMD did this -- when the higher ups know a quarter is a financial disaster, the company will go through large pains to pad as much of the next quarter's losses into the current quarter.


RE: Encouraging
By qrhetoric on 7/19/2007 6:41:17 PM , Rating: 2
It's not like there's anything illegal about it; that's just done to manipulate investor's psycology a bit


RE: Encouraging
By TomZ on 7/19/2007 8:24:00 PM , Rating: 2
Probably not illegal, but not honest and open either.


RE: Encouraging
By Viditor on 7/20/2007 12:13:06 AM , Rating: 2
quote:
Probably not illegal, but not honest and open either

But it is the standard for most all companies...


RE: Encouraging
By christojojo on 7/20/2007 9:16:41 PM , Rating: 2
quote:
To have a right to do a thing is not at all the same as to be right in doing it. G. K. Chesterton English author & mystery novelist (1874 - 1936)


http://www.quotationspage.com/quote/32968.html

It is something people tend to forget when things are in their favor.


RE: Encouraging
By gramboh on 7/20/2007 1:03:40 AM , Rating: 2
It depends on the methodology. It has to comply with accounting GAAP or it is legal/fraud (earnings manipulation). If you can juggle orders/contracts to max out your losses in a quarter you know is going to be poor, that is fine, but playing games with numbers (e.g. deferrals, early write-offs/recognition) is accounting fraud and illegal. Audit firms do not knowingly sign off on reports if this type of thing is detected.


RE: Encouraging
By bunga28 on 7/19/07, Rating: 0
RE: Encouraging
By TomZ on 7/19/07, Rating: 0
RE: Encouraging
By TomZ on 7/19/07, Rating: -1
RE: Encouraging
By cheetah2k on 7/19/2007 10:57:53 PM , Rating: 2
Tomz, it seems with you that every 1 point rating, you are downrated 2.

Down-rating Tomz points - so true, its amazing! lol


RE: Encouraging
By Viditor on 7/20/2007 12:15:15 AM , Rating: 2
quote:
for every dollar of revenue, it cost them about 1-1/2 dollars?

Your comparison of Revenue vs COGS is highly inaccurate. The vast majority of those costs have nothing to do with production, they are finance and acquisition costs...they are also not ongoing costs.


RE: Encouraging
By defter on 7/20/2007 2:40:40 AM , Rating: 3
quote:
The vast majority of those costs have nothing to do with production, they are finance and acquisition costs...they are also not ongoing costs.


Of $600M loss, only $78M were related to ATI acuisition. "Finance" costs include things like interest payments, how they aren't ongoing costs? AMD paid $99M in interest payments in Q2, they will definitely pay similar amounts in the near future (unless they take additional loan in which case their payments would increase).


RE: Encouraging
By Viditor on 7/20/2007 11:30:57 PM , Rating: 3
quote:
Of $600M loss, only $78M were related to ATI acuisition

No...
Acquisition related costs were $94 Million (not counting interest payments)...down from $113 Million last quarter. (page 3)
http://www.amd.com/us-en/assets/content_type/Downl...

Interest payments are scheduled to reduce over time, and as revenue increases (k10 release, increased seasonal revenue) the amount can reduce quickly from early payoff.


RE: Encouraging
By RW on 7/19/07, Rating: -1
RE: Encouraging
By HaZaRd2K6 on 7/19/2007 11:26:01 PM , Rating: 4
Wrong. If AMD goes under, who else is going to have the cash to go up against Intel? Sure Richard Branson has cash coming out his ears and he's in almost every other market, but he's not stupid. It would take a ridiculous amount of cash to start a company that could compete with Intel to the scale that AMD is (not to mention researching technologies/buying AMD's IP).

So no, there would not be competition, there would be monopoly.


RE: Encouraging
By Viditor on 7/20/2007 12:17:13 AM , Rating: 5
quote:
If AMD goes under, who else is going to have the cash to go up against Intel?

Samsung...they have far more cash than Intel, and they are kicking Intel's butt in the rest of the semiconductor space. Adding AMD would make them the number one powerhouse by a large margin.


RE: Encouraging
By gramboh on 7/20/2007 1:05:18 AM , Rating: 2
Interesting and good point. I could see it happening. What is the speculation on AMD's take out share price range?


RE: Encouraging
By Viditor on 7/20/2007 1:32:26 AM , Rating: 2
quote:
What is the speculation on AMD's take out share price range?

A good question...I personally don't see anyone at AMD (or the rest of the shareholders) settling for anything under the high 30s/low 40s at the moment.
That would put the cost into the $20 Billion range, though Samsung does have over $50 Billion available to them.


RE: Encouraging
By Treckin on 7/20/07, Rating: -1
RE: Encouraging
By wordsworm on 7/20/07, Rating: 0
RE: Encouraging
By Spivonious on 7/20/2007 9:56:24 AM , Rating: 2
Yep, capitol refers to the actual building where a legislature meets (federal or otherwise).

I was unaware that it was a solely American word, but after looking it up in the dictionary, I see that it is. Education FTW!


RE: Encouraging
By Tsuwamono on 7/20/2007 2:29:28 PM , Rating: 2
its not, canada uses it to. but our building is called Parliament


RE: Encouraging
By wordsworm on 7/20/2007 11:23:20 PM , Rating: 2
No, we don't refer to our capital as the capitol. Google it and it'll ask you, "Did you mean Ottawa capital?" Of course, maybe you're referring to the theatre company, Capitol, which is in Ottawa? If you find a legitimate publisher refer to Ottawa as the capitol, please let me know. I tried to find it but failed.


RE: Encouraging
By deeznuts on 7/20/2007 12:50:18 PM , Rating: 3
quote:
If AMD goes under, who else is going to have the cash to go up against Intel?
How about the one company that is probably most central in helping AMD compete, IBM.


RE: Encouraging
By TomZ on 7/20/2007 1:46:14 PM , Rating: 2
Doubtful, I don't see any incentive for IBM to invest in competing in the x86 market against Intel. Most likely investors would be private equity investment firms that would take over AMD, reorganize them, return them to business efficiency, and then profit based on the resulting capital gains in turning around the business.

I thought you worked at an investment company - why do you think IBM would be interested in getting involved?


RE: Encouraging
By Phynaz on 7/20/2007 3:19:22 PM , Rating: 2
IBM already has an X86 license, and used to produce X86 cpu's.

They apparently don't want to be in that busniess, and wouldn't gain anything by doing so.


CPU/GPU Breakdown?
By Slaimus on 7/19/2007 6:06:06 PM , Rating: 2
They should give more details on how much of it is contributed by by their graphics division. The Radeon HD sounds like the revenue-increasing and loss-increasing difference.




RE: CPU/GPU Breakdown?
RE: CPU/GPU Breakdown?
By Viditor on 7/20/2007 12:26:55 AM , Rating: 3
Thanks for posting the link Nemrod...
This illustrates in numbers exactly why people need to understand accounting to analyse a report.
For example, notice that AMD's property, plant and equipment net is $4.5 Billion? I would bet that most don't realise that this does not include Fab 30 at all because Fab 30 has been fully depreciated.
While I would venture to guess that AMD could sell it for $1-2 Billion, it's accounting value is still zero...

This is why Ringold's comment about EBITDA is extremely well taken. Trying to understand what a company has/will have/is spending/owes/etc... without a full analyses is futile.


RE: CPU/GPU Breakdown?
By defter on 7/20/2007 2:30:33 AM , Rating: 1
You can't seriously think that an ancient 200mm/90nm FAB is worth $2 billion these days, when majority of industry has moved their latest fabs to 65nm and 300mm wafers???

Maybe $0.5B is the most that AMD could get from the fab30... Just enough to cover losses for additional quarter.


RE: CPU/GPU Breakdown?
By Phynaz on 7/20/07, Rating: 0
RE: CPU/GPU Breakdown?
By Viditor on 7/20/2007 11:50:10 PM , Rating: 4
quote:
You can't seriously think that an ancient 200mm/90nm FAB is worth $2 billion these days, when majority of industry has moved their latest fabs to 65nm and 300mm wafers

Well firstly, the vast majority is nowhere near 300mm/65nm...even Intel's Fabs are only 1/3 300mm.
Secondly, the output of Fab 30 is now rated at well over 5500 WSPW. There are fewer than 5 other Fabs in the world with this capacity.
Thirdly, Fab 30 is one of only 2 (the other being Fab 36) Fabs that use the automated carrier system that is incorporated into AMD's APM systems (originally developed by Phillips, it's still the absolute cutting edge).


RE: CPU/GPU Breakdown?
By dwalton on 7/23/2007 1:30:08 PM , Rating: 2
Fab 30 hasn't been fully deprecated. AMD is in the middle of a 2.5 billion upgrade on Fab 30 and 38. The facilities and equipment of Fab 30 will probably never fully deprecate unless AMD discontinues any investment into that fab.


RE: CPU/GPU Breakdown?
By Viditor on 7/23/2007 1:41:24 PM , Rating: 2
quote:
Fab 30 hasn't been fully deprecated. AMD is in the middle of a 2.5 billion upgrade on Fab 30 and 38

It has, actually...
While AMD is indeed in the middle of a $2.2 Billion upgrade to turn Fab 30 into Fab 38, the equipment they're replacing (the 200mm lines) is being sold off as well...


RE: CPU/GPU Breakdown?
By dwalton on 7/23/2007 4:32:44 PM , Rating: 2
Every time you reinvest and purchase new equipment and upgrade your facilities, you have to reflect that cost on your balance sheet.


RE: CPU/GPU Breakdown?
By Viditor on 7/23/2007 10:25:55 PM , Rating: 2
quote:
Every time you reinvest and purchase new equipment and upgrade your facilities, you have to reflect that cost on your balance sheet

True, the upgrade cost must be reflected (and will also begin to be depreciated).
However, the upgrades are actually a conversion of Fab 30 to Fab 38...so it's actually Fab 38 that won't be depreciated.


slupmp
By Crazyeyeskillah on 7/19/2007 5:41:55 PM , Rating: 2
Lugo bounced back, so can AMD!




RE: slupmp
By 3kliksphilip on 7/19/2007 6:07:15 PM , Rating: 4
*Hums the Rocky Theme tune*


Horrible performance of ex-ATI!
By defter on 7/20/2007 2:27:16 AM , Rating: 1
Discrete GPU revenue down to $195M with loss of $50M.
Consumer electronics revenue down to $85M with loss of $22M.

Not counting chipset business (chipsets are part of computational group and their revenues are not known), ex-ATI had revenue of only $280M with losses of $77M!

And AMD paid $5 billion for this just a year ago...

For the comparison, in the latest quarter NVidia had $884M revenue with $132M profit:
http://www.nvidia.com/object/IO_42320.html




By wordsworm on 7/20/2007 4:30:20 AM , Rating: 3
Ironically, their stock is up to $15.78 from $15.46 on the heels of this news. I don't think the value of the stock would be so good if investors didn't feel some kind of optimism for AMD. While it's much less than the $30ish it was not too long ago, it's also a lot more than the $5ish it was about 5 years ago. AMD is succeeding more than it's failing. I just think that a lot of people are big Intel fans. For a long time, AMD has been severely beating Intel, and finally Intel is back on top. They're just regurgitating their humble pie.


RE: Horrible performance of ex-ATI!
By Targon on 7/31/2007 4:24:52 PM , Rating: 2
There are elements here that can't be seen without direct information from the inside. The ATI purchase was not as much about profits from selling GPUs as it was about improving the connections between the various components in an AMD based system.

Fusion is the first big thing that most people see from the merger, but the chipset business is really a more important part of the picture. If the connection between CPU, PCI Express components, and the GPU is really really tight, an AMD based machine(CPU+motherboard+Radeon video card) could show over a 10 percent performance benefit compared to the same CPU using the same video card but with a different chipset if all goes well.

One thing I am curious about these days is the performance delta between a Geforce 8800 video card with an NVIDIA chipset, and the same video card on an AMD/ATI chipset with the same CPU. Then test an AMD/ATI video card on an AMD/ATI chipset with the same CPU. There hasn't been a test like this run in a few years, mostly because every site seems to be fixated on Intel CPUs on Intel chipset based motherboards to try to be impartial.


nice pic
By toyota on 7/19/2007 6:48:47 PM , Rating: 3
Whats with the Sears portrait of Mr. Rivet??




RE: nice pic
By cheetah2k on 7/19/2007 10:59:35 PM , Rating: 1
looks like he's spent more time in the tanning salon rather than checking the books?


damn!
By Gul Westfale on 7/19/2007 6:51:50 PM , Rating: 2
i already read about this on http://www.3dcenter.org/ , and they made the point that while AMD's recent losses can be attributed to teh takeover of ATI, the new losses cannot. they say that wit hth ecurrent low pricing AMD's profit margins are extremely thin and as a result they aren't making any money.

two things i'm thinking about:

1- in order to increase prices again (and thus to make money) the phenom CPUs must perform very well. if they don't AMD will never be able to sell them at intel-like prices. according to various sources the phenom will only be available in large quantities in 2008 though- pretty far off.

2- i wonder whether this loss was made by the CPU unit or by the graphics uni (ATI) as well. it would be interesting o know if ATI could help pull AMD out of the water, or whether ATI is holding AMD's head under.




By wordsworm on 7/21/2007 2:14:21 AM , Rating: 2
quote:
http://www.businessweek.com/investor/content/jul20...

Advanced Micro Devices (AMD; $15.78)

Reiterates 3 STARS (hold)

Analyst: Clyde Montevirgen

Operating loss of about 89 cents vs. EPS of 18 cents is wider than our 61 cents loss forecast. Sales grew 12% from first quarter, as AMD likely regained microprocessor market share. Sales mix and better unit shipments from new processes lifted gross margin, offsetting higher operating costs and aided operating margin. We think AMD benefited from strong PC demand and market share gains in lower-end markets, but it may have trouble doing so in the higher-end. We are widening our 2007 loss view by 47 cents to $2.84, but raising our 12-month target price by $2 to $17 on our view of better 2008 growth.


I can't see any hint of pessimism in this article. In fact, they seem to be focussed more on AMDs growth rate. I'm not an expert on finance, and I doubt if anyone here could claim much expertise either. I do see these as being reminiscent of a fortune teller at a carnival. But then, that's what many of you seem to be doing.

Regardless, it's clear that AMD is growing stronger despite their recent problems. It's not inconceivable that AMD will reach greater heights yet.




Please proofread!
By 265586888 on 7/20/2007 1:46:20 AM , Rating: 1
quote:
Today, it's archrival AMD's turn with regards to financial performance for the quarter. AMD recorded revenue of $1.378 billion USD, an operating list of $457 million USD and a net loss of $600 million USD.


Is it me or is the server generating wrong stuff just for me?




1.2 Billion in Losese Total Now
By jdun on 7/19/07, Rating: -1
RE: 1.2 Billion in Losese Total Now
By Martin Blank on 7/19/2007 6:54:11 PM , Rating: 3
They still have a lot of room to work with and are nowhere near bankruptcy. Remember that losses are often paper losses. Accounting rules require that certain future liabilities be counted against current books, and some past expenditures do not count until now. In many cases, cash has already been spent long before (like the ATI purchase) but shows up on the books only now.

AMD is a very wild company when looking at its income sheets. Sometimes they turn a profit, and more often they turn a loss. The scales have been such that AMD has been worried in the past, but I don't think they've been anywhere near bankruptcy in the past decade, and I don't think they're anywhere close to it now.


RE: 1.2 Billion in Losese Total Now
By jdun on 7/19/07, Rating: -1
RE: 1.2 Billion in Losese Total Now
By jdun on 7/19/07, Rating: -1
RE: 1.2 Billion in Losese Total Now
By smitty3268 on 7/19/2007 7:31:58 PM , Rating: 1
It's not like they're just going to run out of money to pay their employees. They'll just have to get another loan.

Looking at the details, they spent another $94 million this quarter on 1 time only ATI acquisition related expenses. When will these stop? I figured they would all occur in the 1st quarter, which had $113 million.

The bad news is that they aren't making a profit in any of their divisions. The Computing Solutions segment lost 23.5 cents for every dollar it made, Graphics 25.6, and Consumer Electronics 25.9. The last two are basically ATI, and make up about 20% of AMD.


RE: 1.2 Billion in Losese Total Now
By stryfe on 7/19/2007 8:23:22 PM , Rating: 1
Taking out another loan isn't so easy if no one's willing to lend you money. As thier financial situation worsens it will get harder to borrow money and those who will lend money will demand stiffer terms.

Taking out a loan to pay for day to day costs (especially for paying interest on other loans) isn't something a company ever wants to be doing. A loan is only ever a good thing if you can use the cash infusion to create profit growth greater than the interest on the loan.


RE: 1.2 Billion in Losese Total Now
By TomZ on 7/19/2007 8:26:44 PM , Rating: 2
True, and to that I would add that, it won't be hard for AMD to get further loans, rather it will be hard to get additional loans with favorable terms. Basically as their financial condition gets worse, the cost of them borrowing money effectively increases, typically through higher interest rates.


By tuteja1986 on 7/19/2007 11:11:32 PM , Rating: 2
Lets hope AMD doesn't go burn into total chaos ;(

Also rumors of IBM and Samsung wanting to buy out AMD is not true and if its true then they want to compete with Intel not just take the best part of AMD to integrate them and sell the rest.


RE: 1.2 Billion in Losese Total Now
By Xavian on 7/20/2007 6:33:44 AM , Rating: 2
Sony seems to have no problem getting them.


RE: 1.2 Billion in Losese Total Now
By jdun on 7/19/2007 9:51:43 PM , Rating: 2
AMD got a 3 billions bank loan to buy up ATI three quarters ago. AMD got another loan for 2 billions last quarter to pay for their upgraded fab. In three quarters they have borrow over 5 billions. That is on top of what other loans they made in the past.

Five billions loans in three quarters for an 8 billion dollar company. Even if their margin is good the interest they incur will eat any profits they would have made.

AMD can't sell off their assets because without the fabs they won't be making chips. Unlike the USA, German laws prevent mass layoff . And if they could they can't because they need these people to make the company work.

They could sell ATI tho. and buy some time.


RE: 1.2 Billion in Losese Total Now
By defter on 7/20/2007 2:43:58 AM , Rating: 2
quote:
When will these stop? I figured they would all occur in the 1st quarter, which had $113 million.


They have $1065M listed under "Acquisition related intangible assets".

Considering the terrific strenght of ex-ATI's current lineup, I don't think these "one-time" charges will stop anytime soon...


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/20/2007 2:49:46 AM , Rating: 3
quote:
I don't think these "one-time" charges will stop anytime soon...

I don't think they will stop altogether, but the charges should reduce drastically after the 1 year anniversary (remember that most of this is payout of employee compensations like insurance, pensions, etc...).


RE: 1.2 Billion in Losese Total Now
By Ringold on 7/19/2007 8:41:57 PM , Rating: 3
quote:
Profits = make payroll = pay bills = pay interest to bank


Holy crap! It's that easy? Hold on while I give my alumni university a call; they can shut down the entire Finance and Accounting departments! They pay all those PhD professors big bucks to teach 2 years worth of upper-division electives to students to do what children could do!

</sarcasm>

EBITDA -- that phrase alone obliterates the simplistic view you've got their admittedly lousy balance sheet. Never touched anything to do with accounting, but there's so many other example of zombie firms staggering along until they recover or are bought out that it's senseless to think AMD will disappear.


RE: 1.2 Billion in Losese Total Now
By theapparition on 7/19/2007 9:00:47 PM , Rating: 2
I'm not trying to flame, but your the only one in this thread who mentioned anything about AMD disappearing. Bankruptcy does not mean out-of-business. It's also not as sinister as it sounds. Rather, at the appropriate time, it could make considerable financial sense. Imagine if your in debt and suddenly, you don't have to pay any of your loans for a year, and when you do start paying, they have been re-negotiated at more favorable terms. It's still not a desireable thing, but it exists for a reason.


RE: 1.2 Billion in Losese Total Now
By Smurfer2 on 7/19/2007 9:55:28 PM , Rating: 4
AMD is going nowhere, they will be around well into the future. These losses are best characterized as "bad."


RE: 1.2 Billion in Losese Total Now
By jdun on 7/19/07, Rating: 0
RE: 1.2 Billion in Losese Total Now
By jdun on 7/20/2007 12:51:43 AM , Rating: 1
AMD has 7.5 billions in liabilities for a 8 billions market cap company.

http://finance.yahoo.com/q/bs?s=amd


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/20/2007 1:02:40 AM , Rating: 3
quote:
AMD has 7.5 billions in liabilities for a 8 billions market cap company


This is why posters need to really learn about these comments first...
Market Cap = Share Price x Number of shares
In other words, it's just a function of the share price...it has nothing to do with what the company is actually worth.
As a matter of fact, a low Market Cap is a very good possible buying signal for a company as it sometimes says that the stock is undervalued


RE: 1.2 Billion in Losese Total Now
By jdun on 7/20/2007 1:20:18 AM , Rating: 1
Market cap is what the market value them at. The market value AMD to be a 8 billion dollar company. The market value Intc to be a 146 billions dollar company. Hence if you want to buy AMD you must pay a minimum of 8 billions. However something you can get it less then the market price.

http://www.investopedia.com/articles/basics/03/031...
http://en.wikipedia.org/wiki/Market_capitalization


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/20/2007 1:29:11 AM , Rating: 3
quote:
The market value AMD to be a 8 billion dollar company.

This is wrong as well...in After Hours trading, AMD is at $16.50/share and there are 550.44 shares outstanding.
That's a Market Cap of $9 Billion...
BTW, did you just skip over the Enterprise value of $11 Billion?


RE: 1.2 Billion in Losese Total Now
By Ringold on 7/19/2007 9:57:26 PM , Rating: 2
quote:
I'm not trying to flame, but your the only one in this thread who mentioned anything about AMD disappearing.


Fair point, I should've used different language, but I think I was responding to the notion that if they dont stop the losses they wouldnt be able to operate until the end of the year, insinuating a shut-down, suggesting disappearance. At least, that's how it rang up in my cloudy head. There's a lot of gloomy language being used. I don't buy in to the doom and gloom in the least. I don't disagree at all with what you just said; essentially, things will continue to roll along just fine. Might end up with a junk bond credit rating (if it doesn't have one already), might end up on the receiving end of an LBO, but that's all natural and AMD will live on.


RE: 1.2 Billion in Losese Total Now
By Hydrofirex on 7/19/2007 11:31:17 PM , Rating: 2
quote:
EBITDA


This must be what it's like when finance majors have a cat-fight.

However, I must inject another perspective which implicitly agrees with the position that if AMD doesn't have enough cash to pay interest payments, let alone paychecks, they will be going into bankruptcy. Fact.

IBM, say what? Which is to say: a downward spiraling AMD is a perfect buyout for IBM. If they were to step in and basically turn AMD/ATi into a consumer division it would create a company much more the revenue and net worth equal of Intel - not to mention one with an equally good R&D department. The more I've thought about this over the last few months the more I've realized it's the perfect opportunity. Only IBM has the diversified revenue stream to maintain a segment that could potentially need to take losses like these for sometime while it comes up with a rebuttal to the Core 2 architecture, and perhaps realizes the promise of Fusion. (I think this is the future.)

I'll go a step further and say that AMD cannot compete against Intel. Not in the Long Term. I know they have managed to pull this off before, but think about it. Intel is an $8.7 Billion giant. Meanwhile, AMD is a $1.3 Billion hobbit. Regardless of which earnings figure you want to use, or how much you think AMD can borrow, this industry is driven by the ability of a firm to invest gonzo amounts of cash into research and fab development. In fact, this is the primary barrier to entry for competitors and a big reason there are only really a hand full of established players. (Sun, IBM, Intel, & AMD would be the major 4?)

Moral of the story is that AMD might be more valuable to all of us if she did enter bankruptcy. If IBM does this I would hope that they just wrote AMD a check as-is and let these very clever engineers do their jobs without having to worry about loosing them eventually...

HfX


RE: 1.2 Billion in Losese Total Now
By melgross on 7/20/2007 12:06:31 AM , Rating: 2
IBM has NO interest in going back to the consumer business. They are doing very well now without it.

AMD is basically screwed.

They laid off people in R&D. What does that say?

With Nehalem, Intel will be going back to Hyperthreading, will use ODMC, and their equivalent of Hypertransport (forget what they call it).

Where does that leave AMD? Barcelona is late out of the gate, and crippled as well.

Phenom may not be much better.

They have the worst process tech (paradoxically, it's what saved then during Intel's Netburst run, and decline).


By Master Kenobi (blog) on 7/20/2007 9:05:25 AM , Rating: 2
Actually Intel has had the best manufacturing process technology since the beginning, this is what kept Intel from slipping further during netburst.


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/20/2007 12:59:52 AM , Rating: 5
quote:
if AMD doesn't have enough cash to pay interest payments, let alone paychecks, they will be going into bankruptcy


I think you are confusing losses with cash burn rate...they are NOT the same thing. AMD still has plenty of money. Look closer at what some of those numbers!
$255 Million Depreciation
$414 Capex
Accounts Payable dropped by $380 Million
They wrote off the rest of the 90nm inventory (they are now on 65nm only) for another $30 Million

quote:
AMD cannot compete against Intel. Not in the Long Term

It's funny, but that's what most said in July of 1999...at the time, AMD competed with Intel in only a single area (discount desktop and mobile) and they had no OEM contracts at all.
Today, AMD competes with Intel in all segments (including chipsets and graphics), has contracts with ALL OEMs, and has vastly greater revenue share than they did. That's 8 years to go from a nothing company to a major rival in an industry with perhaps the highest barriers to entry that there are!
In addition, the anti-trust suit has forced Intel to back off from most of their "shady" marketing practices (and don't forget that the suit is still pending and may represent as much as a $4-10 Billion settlement).


RE: 1.2 Billion in Losese Total Now
By jdun on 7/20/2007 1:11:19 AM , Rating: 2
Here is the balance sheet as of March 07. I assume that they have already sold a number of assets to keep making payroll and interest payments.

http://finance.yahoo.com/q/bs?s=amd


RE: 1.2 Billion in Losese Total Now
By defter on 7/20/2007 2:35:38 AM , Rating: 2
quote:
I think you are confusing losses with cash burn rate...they are NOT the same thing. AMD still has plenty of money. Look closer at what some of those numbers!


Actually if you look at those numbers, then the cash burn rate is actually HIGHER than losses.

In Q2 AMD paid $2.2B to take $1.8B loan. They also paid back $500M of their old loan, thus they got $1.3B of extra cash.

However, current results show that their cash increased only by about $400M (1594-1167). Which means that $900M just dissapeared....

Now they have $1.6B of cash with $5.3B of debt...


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/21/2007 12:12:26 AM , Rating: 2
quote:
However, current results show that their cash increased only by about $400M (1594-1167). Which means that $900M just dissapeared....


You missed the part where they paid off much of their short-term (expensive) payables...$358 Million (short-term payables has reduced from $695M to $337M).
Also, $500M of that "dissapearing money" was spent on Capex for the conversion of Fab 30 to Fab 38.
In addition, the EU is giving AMD 262 Million Euros this quarter...($362 Million USD)
http://www.vnunet.com/vnunet/news/2194633/ec-appro...


RE: 1.2 Billion in Losese Total Now
By Phynaz on 7/20/2007 10:49:25 AM , Rating: 1
quote:
They wrote off the rest of the 90nm inventory (they are now on 65nm only) for another $30 Million


I'd really like to know why you make this up.

They are still producing 90nm chips on 200mm wafers, as from this quote from the conference call.

"Fab 30 winds down output of 90-nanometer 200-millimeter material in the second-half and, as a result, we’ll ship an expanded mix of 65-nanometer CPUs from 300-millimiter wafers in the second-half of this year"


RE: 1.2 Billion in Losese Total Now
By wordsworm on 7/20/2007 11:25:47 PM , Rating: 2
Aren't GPUs and Itaniums (albeit Intel) also being produced using 90nm? Can a fab change from a CPU manufacturer to a GPU manufacturer?


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/21/2007 12:15:22 AM , Rating: 2
quote:
Aren't GPUs and Itaniums (albeit Intel) also being produced using 90nm?

Yes...
quote:
Can a fab change from a CPU manufacturer to a GPU manufacturer?

Yes...or DRAM, or chipsets, etc...


RE: 1.2 Billion in Losese Total Now
By wordsworm on 7/21/2007 2:16:23 AM , Rating: 2
I therefore find it confusing as to why people would be suggesting that the fab is worthless. You mentioned that they're converting it to 65nm/300mm. Nonetheless, I don't see how they concluded that its fab is useless.


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/21/2007 2:29:15 AM , Rating: 2
quote:
I therefore find it confusing as to why people would be suggesting that the fab is worthless


In fairness to defter, he is probably going by older prices for Fabs. Back when Fab 30 was first being built, a new Fab was costing in the $2 Billion range...now it's closer to $4 Billion (in fact just the upgrade to Fab 30 is $2.2 Billion).

You are correct though, Fab 30 is FAR from worthless as an asset...


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/21/2007 12:56:48 AM , Rating: 3
quote:
They are still producing 90nm chips on 200mm wafers

You are correct, I made an error. The $30 Million write-down was for the remainder of the 939 chips.
Currently,
All output from Fab36 (the vast majority) is 65nm.
Fab 30 is being converted to 300mm and they are selling off the 200mm equipment. There will continue to be a dribbling output of 90nm from Fab 30 while they do the conversion.

BTW, as a suggestion to you, you might try to focus more on the discussion than on trying to flame people (specifically me). For example, if you had made this post more in the tenor of a correction than a flame, you might not get modded down so much (it was a good catch after all).

Just a thought...


RE: 1.2 Billion in Losese Total Now
By jdun on 7/20/2007 1:04:31 AM , Rating: 2
The cross license x86 agreement between AMD and Intel prevent AMD from getting bought out by a third party or going to a fab light. If either one happen AMD will lose the x86 license which means they can't produce chip using the x86 architecture. In other words they would be out of the CPU market.

IBM is the only other company that can produce the x86 architecture. However, I do not know if the x86 is their own or licensed from intel.

http://contracts.corporate.findlaw.com/agreements/...

Yes AMD is paying Intel royalties.


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/20/2007 1:15:41 AM , Rating: 2
quote:
The cross license x86 agreement between AMD and Intel prevent AMD from getting bought out by a third party or going to a fab light. If either one happen AMD will lose the x86 license which means they can't produce chip using the x86 architecture. In other words they would be out of the CPU market


This is a common misconception...
The agreement does indeed allow Intel to cancel a 3rd party's access to x86, however you are forgetting that this is a CROSS-licensing agreement. Intel use just as much of AMD's IP as AMD uses of Intel's in their chips.
What that means is that if Intel chose to cancel the agreement, they would ALSO have to stop selling their OWN chips as the 3rd party would own a good portion of those rights.
AMD does not pay Intel royalties, and Intel does not pay AMD royaties...that's the whole purpose of the agreement!


RE: 1.2 Billion in Losese Total Now
By jdun on 7/20/2007 1:24:45 AM , Rating: 2
Read the license.


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/20/2007 1:45:44 AM , Rating: 2
quote:
Read the license

I assume you mean the royalty AMD had to pay on the older 586 chips as part of this settlement?


RE: 1.2 Billion in Losese Total Now
By defter on 7/20/2007 2:37:35 AM , Rating: 2
quote:
The agreement does indeed allow Intel to cancel a 3rd party's access to x86, however you are forgetting that this is a CROSS-licensing agreement. Intel use just as much of AMD's IP as AMD uses of Intel's in their chips. What that means is that if Intel chose to cancel the agreement, they would ALSO have to stop selling their OWN chips as the 3rd party would own a good portion of those rights.


True, but we aren't talking about Intel cancelling the agreement. We are talking about situation where the agreement is cancelled automatically if AMD is purchased by another company.

In that case, Intel retains all rights to use ex-AMD's IP, but company that purchased AMD will not get rights to use Intel's IP.


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/20/2007 3:04:23 AM , Rating: 2
quote:
True, but we aren't talking about Intel cancelling the agreement. We are talking about situation where the agreement is cancelled automatically if AMD is purchased by another company

Not the case here...if you re-read the contract, there is a provision for 3rd parties to receive the same rights that AMD had as long as Intel agrees. If Intel doesn't agree, then the contract is nullified.
quote:
Intel retains all rights to use ex-AMD's IP, but company that purchased AMD will not get rights to use Intel's IP

That is NEVER the case (it violates contract law because IP rights and licenses are considered assets of a company).


RE: 1.2 Billion in Losese Total Now
By Phynaz on 7/21/2007 7:00:32 AM , Rating: 2
You're making stuff up again.

Having sold a company I founded, I can tell you there is no such case law.

If you think there is please post a link.


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/21/2007 7:58:27 AM , Rating: 2
quote:
You're making stuff up again

Still the flame machine, eh?
quote:
Having sold a company I founded, I can tell you there is no such case law

LOL! Now that was truly amusing (thank you!)...it's sort of like saying that since you've flown on a jet, you're qualified to repair it.
quote:
If you think there is please post a link

No need for case law, this is about the basic requirements of a contract (Contract Law 101).
There are 3 basic requirements for any contract...Offer, Acceptance, and Consideration (please look it up). In this hypothetical case, by withdrawing their IP, Intel would be withdrawing any consideration from the contract rendering it null and void.

Do you really think that a company that owns the patents and IP of AMD would be prevented from collecting revenue on it?


RE: 1.2 Billion in Losese Total Now
By Phynaz on 7/22/2007 1:31:51 AM , Rating: 2
Never said anything about it.

I said it would be perfectly fine to write a contract in which conditions could be set in which party A would lose the rights to party B's IP without it affecting the rights of party B.

I'm still waiting for you site a law that would prevent two parties from entering this agreement.


RE: 1.2 Billion in Losese Total Now
By Viditor on 7/22/2007 5:07:17 AM , Rating: 2
quote:
Never said anything about it

Never said anything about what?
quote:
I said it would be perfectly fine to write a contract in which conditions could be set in which party A would lose the rights to party B's IP without it affecting the rights of party B

I can see that you're still having trouble...the contract you are describing is not a legal one because something must be given by both parties. This is called Consideration. In your description, party A no longer recieves consideration while party B does...that makes the contract null and void.
See if the following definitions of Consideration help you at all...
http://www.lawteacher.net/Contract/Agreement/Consi...


RE: 1.2 Billion in Losese Total Now
By Treckin on 7/20/2007 2:24:42 AM , Rating: 2
Yes, but AMD has to ONE RING TO RULE THEM ALL!!!!!


"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki