backtop


Print 135 comment(s) - last by GI2K.. on May 5 at 2:46 PM

AMD scrambles to raise capital but risks long term company health

In July of last year, AMD and ATI merged to form one of the largest semiconductor companies. The cost of the acquisition was an enormous burden for AMD: $5.4 billion USD. Analysts at the time said that the acquisition would be a bad move for AMD, noting that the chip company would be better off plunking the large amount of cash in other core businesses like micro processors.
 
Of the $5.4 billion that it took to purchase ATI, AMD borrowed roughly $2.5 billion in loans and combined with $1.2 biillion common stock. The acquisition not only cost AMD much of its available principle but also left it in heavy debt. At the time, AMD did not disclose plans of how it would pay off the debt. In fact, two months before the confirmed acquisition of ATI, AMD announced that it would be spending $5.8 billion USD into the development of fabs in Dresden, Germany.

Last week, AMD announced that it will offer Convertible Senior Notes to investors in an attempt to raise roughly $2.2 billion. However, unlike common stock purchases, Convertible Senior Notes put AMD further into debt -- in this case, another $2.2 billion USD. Using Convertible Senior Notes, investors profit since the notes can be converted to common stock once AMD is performing well.

Using Convertible Senior Notes, AMD can receive usable cash now, but not have to worry about paying back its investors until its common stock reaches a predefined price. In this case, AMD set the conversion point to be $42.12 USD per share but its current price is roughly $14. In the catastrophic event that AMD goes bankrupt, Convertible Senior Notes take priority over other debts and thus bond investors are guaranteed the return on their investment.

With excellent market performance from rival Intel, AMD posted a painful first quarter loss of $611 million USD this year. AMD is now left with roughly $1.1 billion in the bank; a figure that has analysts worried.

Nicholas Aberle, Senior Vice President of Equity Research, Caris Company, states, "AMD is still spending a good clip.  Without borrowing the company could run out of cash by late Q3, early Q4."  Arberle adds, "[AMD] needed to raise capital just to keep the doors open."

Raising capital is only part of the equation so far.  Last month, AMD announced plans to restructure the company and to cut $500 million USD in capital spending in order to feather off some of its financial woes. While the strategy may prove to be helpful in the short term, cutting back on capital spending eats into new facilities and R&D. 

In addition, cutting expenses is not an easy task in the middle of a fierce price war. AMD announced large cuts across its high-end processors earlier this April, following Intel's cuts just last week.

Both companies are expected to further slash prices as AMD debuts its Barcelona processor family this summer.


Comments     Threshold


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

Corrections to the article
By Viditor on 4/30/2007 11:27:39 AM , Rating: 4
Tuan, you have some inaccuracies there...I will try to clear them up.

1. The $2.2 Billion is being used to pay down more expensive debt as well, so they are not increasing debt by anywhere near that much (closer to half that).

2. When you state "Using Convertible Senior Notes, investors profit since the notes can be converted to common stock once AMD is performing well", it's much more complex than that. I'll quote from a poster on another board (who is FAR smarter than I am...):

"this is the sort of deal that Bob Rivet does so well. AMD intends to sell convertible bonds that will be convertible to AMD stock. To prevent this from diluting the existing stock, AMD will buy capped calls, capped at around $42/share, to repurchase any shares necessary to cover exercise of the conversion option. The conversion option will probably be for much less than $42/share, but the call cap at that price will allow AMD to use that number in dilution calculations.
At some point in the future assuming that AMD's stock price takes off, it could make sense for holders of these convertible bonds to exercise the conversion right. If and when that happens, AMD can exercise the capped calls. If the price exceeds $42, AMD will get the cash, not the stock, so they will have to issue treasury shares. Of course, AMD, and its current stockholders should have no objection to selling treasury stock at $42/share.
The effect is as if AMD buys shares from the treasury at $42 to use to cover the conversion. Let's say that the converion price is $20, to keep the numbers easier. Or more correctly, each $1000 face value bond can be converted to 50 shares. If say someone wants to convert bonds to 100,000 shares when the share price is $50, AMD would issue 100,000 shares of treasury stock and execute the capped calls for the same number of shares.
This would result in 4.2 million dollars in the treasury, along with wiping out some of the bonds and a corresponding number of capped calls. Notice that AMD would get $22 from the capped calls, and erase $20 in face value of bonds, to get that $42 in the treasury.
Yes, it is complex, and AMD is likely to force conversion of the bonds, if possible, before the stock price gets quite that high. So at $35, AMD pays $20 per share to exercise the calls, and hands the resulting stock to the bond holders. In this case, AMD needs to have the money to pay off the bonds, but it results in no dilution.

The important piece of perspective to take with you is that Bob Rivet is confident that a year from now AMD's stock will be worth more than it is today."




RE: Corrections to the article
By crystal clear on 4/30/2007 12:00:05 PM , Rating: 2
In a previous article on AMD I had made a comment with a link (Reuters)which says it all-what you say now.

RE: Very nervous & concerned investors
By crystal clear on 4/24/07, Rating: 2
By crystal clear on 4/24/2007 6:37:18 AM , Rating: 2

UPDATE 1-AMD offers up to $2.2 billion in notes

AMD would offer an initial amount of $1.8 billion in notes, with the interest rate, conversion price and other terms to be determined in negotiations. Initial purchasers will also have the option of buying an additional $400 million of notes.

AMD said it would enter into capped call transactions in connection with the offering, a move intended to reduce the potential dilution to common stockholders if the notes are converted into shares

Earlier on Monday, credit ratings agency Standard & Poor's downgraded AMD to "B", it's fifth-highest "junk" grade, citing "subpar" execution of its business and a tougher business environment.

http://www.reuters.com/article/bondsNews/idUSN2333...


RE: Corrections to the article
By Viditor on 4/30/2007 12:06:58 PM , Rating: 2
quote:
In a previous article on AMD I had made a comment with a link (Reuters)which says it all-what you say now

Fair enough...but for your header, you might want to rethink it.
When the details of the deal were first announced, the stock price shot up on more than double normal volume. I think that most of the savvy investors were quite optimistic from it...


RE: Corrections to the article
By crystal clear on 4/30/2007 12:54:15 PM , Rating: 1
quote:
stock price shot up


Maybe I am wrong - who knows ...but I feel

"Brokers doing some profit taking"

quote:
savvy investors were quite optimistic from it...


I wonder what makes them optimistic ?

AMD is best described as "Many press releases & No CPUs"

Message- Get the product out into the market FAST-Barcelona ofcourse.


RE: Corrections to the article
By ybee on 4/30/2007 1:54:45 PM , Rating: 2
What makes them optimistic is the 6% interest rate and the $28 conversion price. And the fact that AMD thinks it a good idea to hedge all the way up to $42.

All this indicates that AMD and note buyers believe that AMD shares may well return to the $28-$42 range in the not so distant future.


By crystal clear on 4/30/2007 3:20:54 PM , Rating: 2
quote:
that AMD shares may well return to the $28-$42 range in the not so distant future.


Thats what I call wishful thinking
quote:
in the not so distant future


RE: Corrections to the article
By Phynaz on 4/30/2007 1:34:04 PM , Rating: 1
Stock price moves made on exceptionally light or heavy volume are not indicative of fundamentals.

I thought you were a knowledgable investor?


RE: Corrections to the article
By crystal clear on 4/30/2007 12:06:15 PM , Rating: 2
quote:
Tuan, you have some inaccuracies there...I will try to clear them up.


I repeatedly post the AMD press release just for the purposes of clarity/accuracy/correct analysis.


RE: Corrections to the article
By Viditor on 4/30/2007 12:16:32 PM , Rating: 2
quote:
I repeatedly post the AMD press release just for the purposes of clarity/accuracy/correct analysis

And I commend you on the links!
My comments are directed towards your conclusions...


RE: Corrections to the article
By crystal clear on 4/30/2007 12:41:35 PM , Rating: 2
When AMD is discussed "Viditor" is always there commenting & responding to comments.

I refer to you as the AMD specialist.


RE: Corrections to the article
By Viditor on 4/30/2007 1:20:47 PM , Rating: 2
quote:
I refer to you as the AMD specialist

I think of that as a compliment...:)
However, I can also discuss finance, investing, microbiology, television engineering, and many other topics...(in case you want to change topics).
:)


RE: Corrections to the article
By phusg on 5/1/2007 7:20:45 AM , Rating: 2
By Viditor on 3/6/2007 at 4:29:05 AM
quote:
I do think AMD will be in the low 30's at least by this time next year.

I'm interested if you, as resident AMD specialist, still stand by this statement you made last quarter, in the light of recent events? http://www.dailytech.com/Article.aspx?newsid=6351&...


RE: Corrections to the article
By Viditor on 5/5/2007 12:50:50 AM , Rating: 2
quote:
I'm interested if you, as resident AMD specialist, still stand by this statement you made last quarter

I absolutely do...in fact I have invested over $500k over the last few months for just that reason...


RE: Corrections to the article
By defter on 4/30/2007 12:52:26 PM , Rating: 2
quote:
1. The $2.2 Billion is being used to pay down more expensive debt as well, so they are not increasing debt by anywhere near that much (closer to half that).


This is simply incorrect. Read the AMD's press release: AMD took $2.2B debt, they paid about $200M in various fees and reduced their existing debt by about $0.5B. Thus their overall debt was increased by $1.7B (closer to $2.2B instead of $1.1B) and their cash position was increased by $1.5B.


RE: Corrections to the article
By melgross on 4/30/2007 3:55:41 PM , Rating: 2
This analysis is not quite as good as you think it is.

First of all, reporting dilution must be done at the actual price of conversion. It might be less than $42, but it might not. The proper reporting of dilution after S-O is very important. The reporting of dilution at actual value adds no advantage to the balance sheet. Even reporting it at higher levels than it would be would only result in paper value. It simply moves cash from one pocket to another. No change occurs.

Secondly, there is no mechanism that would allow AMD to "force conversions" at any price lower than $42. That doesn't mean that conversions won't take place at lower prices. But many might not. The lower the conversion price, the greater benefit to AMD. As it approaches $42, AMD becomes increasingly stressed by it.

The analysis is flawed.

This deal is going to cost AMD in the long run.


Analysts... (emphasis on anal)
By Justin Case on 4/30/2007 3:46:55 PM , Rating: 4
Any analyst who said it was a bad idea for AMD to move into the GPU business is an idiot. GPUs and GPU derivatives (like PPUs and certain types of vector coprocessors) are the main are of development in processing right now. It's not a coincidence that Intel is now also taking high-end GPUs seriously.

AMD's main mistakes were moving to DDR2 when there was no real need (wasting time and money on R&D and fab retrofitting) and not releasing a Clovertown-style CPU (two dual-core dies on one package).

Other than that, AMD's management and engineering department have been doing almost everything right. Remember Intel is more than 10x the size of AMD, doesn't exactly play fair (they've already lost some anti-trust suits in Japan and Europe) and AMD still manages to beat it in many key areas, and has a CPU market share much bigger than its relative size would suggest.

Acquiring ATI has its risks and costs, but those are irrelevant compared with the risks (and long-term costs) of not having a competitive, high-end GPU / vector processing solution. Developing one from scratch would cost more than acquiring ATI.

AMD's Torrenza is a lot more innovative than anything Intel has up is sleeve. Remember Intel's last biggest "innovation" (IA-64, a.k.a. the Itanic)? Boy, that sure made a huge difference to 99% of conusmers, eh?

Intel has better fabs, as always, but they haven't had a useful original idea in eight years (the only exception is Intel Israel, which has done some great work in power efficiency, but they're still seen as the "black sheep" by Intel's top management).

People interested in short-term profits from AMD stock might be in for a rought time but, for consumers, AMD's strategy ensures continued innovation and low prices. If Ruiz really screws up (which I doubt), there's no shortage of companies interested in buying them out (IBM, AMAT, even MS). Compared to their position in the market, patent portfolio and human assets, AMD is a bargain.




RE: Analysts... (emphasis on anal)
By rchiu on 5/1/2007 7:46:46 PM , Rating: 3
I am sorry but buying ATI IS an idiotic move on AMD's part. I mean going into GPU business is fine and all, but buying ATI instantly turned nVidia, a historically AMD ally and the leader in video and mobo chipset manufacturer, into their competitor. All for what? A second place video and weak chipset manufacturer.

A64 didn't become enthusiast's choice by itself. It was the stable nforce4 mobo and sli chipsets that made A64 gamer’s choice. So do you think nVidia gonna do their best to provide AMD another really good gaming platform now that AMD is also their competitor? If they have a choice to optimize their code for Intel platform and AMD platform, which platform do you think they will go for first?

One big mistake Intel made couple of years back was losing their focus on CPU and go off and do all those multi-media and networking stuff. Going to lucrative industry not knowing what you are doing or waste extra resources on secondary products and lose focus on your main product is not a good thing. Intel learned their lessons, sold their networking business and stop making all those useless gadgets and now they are a force to deal with. I hope AMD learn their lesson in time and can return their focus on what they do best, that is making great CPU.


By Justin Case on 5/2/2007 1:21:53 AM , Rating: 2
You just wrote "going into the GPU business is fine and all" and then that "if nVidia sees AMD as a competitor, they'll turn against them".

So, in your opinion, it would "be fine and all" to go into the GPU business... as long as they only released crap products, that couldn't compete with nVidia's? What good would that do to them?

Does your "logic" make any sense to you...?

AMD had to go into the GPU business. For the same reasons that Intel is doing the same. What difference does it make to nVidia if they build their own GPU from scratch or buy ATI? AMD bought ATI, Intel decided (unsurprisingly) to go with in-house development (the NIH is still strong, chez Intel).

But hey, I'm sure you know a lot more about the IC business than those idiots at Intel and AMD, right?

Why shouldn't nVidia continue to release good AMD (or Intel) chipsets? It's up to the motherboard manufaturers to pick the chipsets they use on their boards. And it's up to consumers to pick which graphics cards they buy. That's nVidia's business. If they can't deliver something better than the competition, they die.

If anything, nVidia is better off competing "just" against AMD and Intel than against AMD, Intel and ATI.

As to the concept of "stable" nForce 4... let's just say that what you consider stable and what high-end server and workstation makers consider "stable" might be slightly different... FYI, most high-end boards out there use nForce almost exclusively as a PCIe controller, and either disable or replace everything else (LAN, audio, etc.) with dedicated chips (from AMD, Broadcom, etc.). Even the SATA controller on NF4 is a piece of crap, and the chipset eats more power and gets hotter than some CPUs.


Correction
By Griswold on 4/30/2007 9:47:32 AM , Rating: 2
Friday, AMD announced that it will offer Convertible Senior Notes to investors in an attempt to raise roughly $2.2 billion.

The sale was closed on friday. AMD announced it monday a week ago.




RE: Correction
By crystal clear on 4/30/2007 10:02:41 AM , Rating: 2
Press release-

Advanced Micro Devices, Inc. Closes $2.2 Billion Offering of Convertible Senior Notes

SUNNYVALE, Calif -- April 27, 2007 --Advanced Micro Devices, Inc. (NYSE:AMD) today announced the closing of its offering of $2.2 billion aggregate principal amount of 6.00% Convertible Senior Notes due 2015, including $200 million of notes that were issued in connection with the exercise in full of the initial purchasers’ over-allotment option. The notes were privately offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

In connection with the offering, AMD entered into capped call transactions with an affiliate of one of the initial purchasers. The capped call transactions are intended to reduce the potential dilution to AMD’s stockholders upon any future conversion of the notes. The capped call transaction effectively will increase the conversion price of the convertible notes to $42.12 per share of AMD’s common stock, representing a 300% premium relative to the last reported sale price of $14.04 per share of the common stock on April 23, 2007.

http://www.amd.com/us-en/Corporate/VirtualPressRoo...


RE: Correction
By crystal clear on 4/30/2007 10:06:33 AM , Rating: 2
quote:
AMD announced it monday a week ago


April 24, 2007 Advanced Micro Devices, Inc. Prices $2 Billion of 6.00% Convertible Senior Notes due 2015

April 23, 2007 Advanced Micro Devices, Inc. to Offer $1.8 Billion of Convertible Senior Notes

http://www.amd.com/us-en/Corporate/VirtualPressRoo...


By SleepNoMore on 5/2/2007 1:45:16 AM , Rating: 2
I'm rooting for AMD. I hope they survive.
I remember some article a long time ago that jokingly said IBM's problem is not brainpower or financial resources.
It's that "they couldn't market a cure for death!" I.e. The Ben Stein school of marketing.

I could picture IBM buying AMD and then it would be like that scene at the end of Raiders of the Lost Ark: (parapharsed) "Well...where is it?" (As the Ark of the Covenant is shown sitting in a crate with a zillion other crates in some warehouse) Answer: "We've got men working on it...TOP men!"

C'mon AMD! You deserve better than that!

To the people that say Intel is too smart to "kill" AMD. Bullpocky. They hate AMD because for a year or two AMD was able to worry and in a few cases humiliate them. This has become personal with a business front to it.

By the way...I think the E6600 is the best chip on the market for the price. It's what AMD really has to beat.




By cheetah2k on 5/2/2007 4:11:38 AM , Rating: 2
Indeed this has become personal to Intel. So much so that they are sacrificing their own bottom line to price AMD out of the market.

This is a HUGE test for AMD, probably the hardest test they will ever face in their road to victory. They are under asseted, under financed, under budgeted and further more, under prepared for such a decisive onslaught Intel has prepared (well in advance) against AMD.

AMD is undisputedly a lamb on its way to the slaughter house. The next 2-3 months will be critical, and the failure of Barcelona will undoubtedly be the final nail in the coffin.

AMD, i wish you all the best.


By cheetah2k on 5/2/2007 4:15:59 AM , Rating: 2
Also, as horrifying as it seems if the likes of IBM bought out AMD, AMD really needs friends and partners at the moment to survive.

With all of the development and trading of technology between AMD and IBM, they could most certainly be one of them.



AMD is doing it wrong...
By cscpianoman on 4/30/2007 11:26:32 AM , Rating: 3
AMD is trying to take Intel's place by attempting to match everything Intel does. From chipsets to CPU's they are trying to best Intel at their game, which in my mind is stupid. Intel has far more resources and expertise than AMD ever has and probably ever will. What AMD should do is differentiate, change their strategy. They have to realize they can't beat Intel, but they can at least be comparable. By doing that they can save millions on R&D and increase their margins. The best example I can think of is Walmart(Intel) vs. K-Mart(AMD). K-mart attempted to lower prices only to be crushed by Walmart's distribution power. AMD needs to be more like Target. Market to a specific group and hold to your guns. There is nothing wrong with being in second place as long as it is a solid second place. I sure hope things turn around for them because I would hate to see them go.




RE: AMD is doing it wrong...
By Oregonian2 on 4/30/2007 2:06:54 PM , Rating: 2
You do know, of course, that K-Mart now owns Sears. Does that fit into the comparisons? :-)


Products
By Chadder007 on 4/30/2007 8:52:38 AM , Rating: 2
AMD needs to seriously get some product out, with their Barcelona and new ATI GPUs. The longer they drag their feet the worse off they are.




RE: Products
By bupkus on 4/30/2007 8:56:50 AM , Rating: 2
I agree. This mood has me worried. I want ATI to get off it's duff and show us something. Needless to say, AMD has to release Barcelona and give me a reason to build an unneeded computer. C2 is a great product but Intel is mauling AMD against the interests of us, the consumers.


RE: Products
By LogicallyGenius on 4/30/07, Rating: -1
HaHaHa
By SSJGohanMlm on 4/30/07, Rating: 0
RE: HaHaHa
By fake01 on 5/1/2007 2:05:03 AM , Rating: 2
Why would you enjoy seeing them bleed, it will be bad for all of us.


If AMD is that weak.....
By cheetah2k on 5/1/2007 9:35:49 PM , Rating: 2
I would suggest that AMD is in a low enough postion, not to be able to fend off a take-over bid.

Intel could be rubbing their hands together just waiting to strike.

To be honest, i'd rather see IBM buy them out, after all, AMD use a hell of a lot of IBM's tech in fab.




I can place a bet that AMD is a goner.
By vze4z7nx on 4/30/07, Rating: 0
By fake01 on 5/1/2007 2:14:13 AM , Rating: 1
I don't think AMD is a goner, but i won't place a bet on it. The fact is (and it's been said thousands of times), if AMD falls so will ATI, thus there will be only NVIDIA and Intel. They than can slow down production time on there next generation CPU/GPU chips (making us wait longer) and charge what ever the hell they want, and if your a gamer like me you will have no choice but to upgrade if you want to play a desired game.

The simple fact is idiots like you don't care what happens in the future all you care about is what your getting now, if you actually sat down and thought about it (in your case i would strongly recommend contemplating), you would see that it will be a very bad thing if AMD falls. I really hope Barcelona is the key for AMD's survival, they now say it is up to 50% or more in some benchmarks faster than C2D. Intel says Penryn will only be around 40% to 50% faster, so AMD still has a chance, even against Penryn.


Almost
By Phynaz on 4/30/07, Rating: 0
RE: Almost
By Viditor on 4/30/07, Rating: 0
So much we dont know
By OcHungry on 4/30/07, Rating: -1
RE: So much we dont know
By James Holden on 4/30/2007 8:53:32 AM , Rating: 3
quote:
and then goes to risk another $2.2 to buy time. Why?

To keep the doors open is my guess.


RE: So much we dont know
By Shintai on 4/30/2007 8:58:21 AM , Rating: 2
You know barcelona is server, and the desktop is closer to 2008 than 2007?

Also, it takes about a year to completely shift production. So its not like barcelona or even desktop K10 will make a huge part of the product mix anytime soon.

And even if R600 becomes a huge success wotn make much cash. look on ATIs profit list the last couple of years. They made about 3x the profit in 2005 of what greedy Hector earns. (2006 was a loss).


RE: So much we dont know
By Viditor on 4/30/2007 12:01:21 PM , Rating: 2
quote:
the desktop is closer to 2008 than 2007?

Ummm...Q3 2007 seems to me to be closer than 2008. What do you mean?


RE: So much we dont know
By coldpower27 on 5/3/2007 2:27:47 PM , Rating: 2
Do you have a link Viditor, from what I see desktop is Q4 2007.

http://www.cpilive.net/v3/inside.aspx?scr=n&NID=13...

Let's see if Barcelona remains on schedule for "Mid 2007" Q3 2007, as only July/August would fall into Mid 2007.


RE: So much we dont know
By Viditor on 5/5/2007 11:07:50 AM , Rating: 2
quote:
Do you have a link Viditor, from what I see desktop is Q4 2007

http://images.dailytech.com/nimage/4622_large_star...


RE: So much we dont know
By GI2K on 5/5/2007 2:39:28 PM , Rating: 2
Unless a quad core is now a desktop CPU the dual core will only be out on the Q4.


RE: So much we dont know
By MartinT on 4/30/2007 1:02:57 PM , Rating: 2
quote:
Also, it takes about a year to completely shift production.


Last time (K8), it took AMD 6 quarters (1 1/2 years) from Opteron's introduction to >10% of output being K8-based, much more for total conversion.


RE: So much we dont know
By Viditor on 4/30/2007 1:15:57 PM , Rating: 2
quote:
Last time (K8), it took AMD 6 quarters (1 1/2 years) from Opteron's introduction to >10% of output being K8-based, much more for total conversion

A fair point...but AMD finished converting all new manufacturing to 65nm/300mm (all wafers at Fab 36, more than 50% of production now, are 65nm) last month...and many of those new lines are already spitting out K10s. AMD expects to be 100% K10 by this time next year.
This is EXTREMELY fast (Intel is only 40% C2D at the moment).


RE: So much we dont know
By Phynaz on 4/30/2007 1:30:01 PM , Rating: 1
quote:
AMD expects to be 100% K10 by this time next year.


Got an authoritative link for that?

Everything I've seen says K10 isn't even a factor this year, so I don't know how the would do a 100% changover in a quarter.


RE: So much we dont know
By coldpower27 on 5/3/2007 2:30:08 PM , Rating: 1
100% K10 by Q2 2008? I seriously doubt that, it takes more then a year to shift production considering Barcelona isn't coming in till Q3 2007.


RE: So much we dont know
By GI2K on 5/5/2007 2:46:36 PM , Rating: 2
lol what a nice dream... according to the AMD plans the value CPUs will only come out in 08.

Let's be realistic no company will shift 100% of it's production in just 8 months...


RE: So much we dont know
By ramj70 on 4/30/2007 9:02:05 AM , Rating: 4
Who knows what type of financial advice AMD is getting. Just because they are large company doesn't mean they are doing things right. The business world is full of businesses, small and large going bankrupt and/or failing because of unwise investments.

I hope AMD doesn't fail, I don't want to see just one chip maker since we as the consumers will lose. Lets hope AMD knows what they are doing, but right now its not looking good.


RE: So much we dont know
By Targon on 4/30/2007 12:10:07 PM , Rating: 2
When it comes down to it, buying ATI was the right move, but at the wrong time. If AMD had waited until K10 was released, the company would be in better shape when it comes to their cash position.

AMD will be able to survive through 2008, and by that time, their financial situation SHOULD have improved. Most people look at AMD and see problems, but AMD is manufacturing limited at this point, and being able to produce more processors will help their financial situation a LOT.


RE: So much we dont know
By Viditor on 4/30/2007 12:13:55 PM , Rating: 2
quote:
When it comes down to it, buying ATI was the right move, but at the wrong time. If AMD had waited until K10 was released, the company would be in better shape when it comes to their cash position

I don't think even AMD would disagree with you there...
Unfortunately, it takes so bloody long to develop a new chip that they really had no choice because of Fusion.
Remember that all semi companies must do their planning many years in advance (it takes ~5 years to bring a new chip to market).


RE: So much we dont know
By MartinT on 5/1/2007 2:36:20 AM , Rating: 2
quote:
If AMD had waited until K10 was released, the company would be in better shape when it comes to their cash position.
More importantly, had AMD waited for ATi to fail as badly as they did in the past 9 months, ATi would've been a $2~2.5 billion purchase, rather than the $5.4 billion one eager Hector agreed to.

quote:
AMD is manufacturing limited at this point
That's not true, and hasn't been true for the past 2 quarters.


RE: So much we dont know
By Viditor on 4/30/2007 12:26:13 PM , Rating: 2
quote:
Who knows what type of financial advice AMD is getting

Well, I can tell you that Bob Rivet (AMD's CFO) is recognised as a true genius in the financial world...he is probably in the top 10 at structuring financing.


RE: So much we dont know
By noxipoo on 4/30/2007 12:28:46 PM , Rating: 2
doesn't seem like he is doing too good of a job.


RE: So much we dont know
By Viditor on 4/30/2007 12:32:41 PM , Rating: 2
quote:
doesn't seem like he is doing too good of a job

He's doing a GREAT job...how many CFOs could structure a deal whereby the company receives Billions and doesn't dilute their shares at all??


RE: So much we dont know
By defter on 4/30/2007 12:47:18 PM , Rating: 2
I would say quite many, considering that getting a big loan is very easy in these days. BTW, AMD did receive 1.5 Billion of extra cash after all expenses, not "Billions".

But, if the guy is genius, then why AMD has a large debt in the first place, and why they are making loss that accounts for half of their revenue?


RE: So much we dont know
By Mojo the Monkey on 4/30/2007 1:07:29 PM , Rating: 2
if and when you become familiar with corporate accounting, many companies are actually healthy with their debt. Its all part of their debt/equity ratio, and has finance implications from stock valuation to taxation. debt does not equal poor company performance. Corporation's finances are not comparable to your personal finances.


RE: So much we dont know
By Russell on 4/30/2007 3:11:23 PM , Rating: 2
Exactly. Intel is sitting on a couple billion in debt but something like three times the debt amount in cash. If holding debt was a negative thing, they'd have paid it off years ago.


RE: So much we dont know
By Russell on 4/30/2007 3:13:24 PM , Rating: 2
Specific information:

Intel has 9.02 billion in cash and 1.99 billion in debt. My figures were off, but in a way that supports my statement more :)

Debt-equity ratio is 0.053 -- ridiculously low.

http://finance.yahoo.com/q/ks?s=intc


RE: So much we dont know
By Viditor on 4/30/2007 1:10:43 PM , Rating: 2
quote:
AMD did receive 1.5 Billion of extra cash after all expenses

After expenses...those expenses include paying off old (more expensive) debt. The total amount was $2.2 Billion (qualifies as Billions in my book).
quote:
then why AMD has a large debt in the first place, and why they are making loss that accounts for half of their revenue?

I could probably write at least 10 pages in answer to those questions, but it's 3AM here and I need some sleep.
The short answer is: Predominantly due to the price war and investment into future chips/technology


RE: So much we dont know
By Kuroyama on 4/30/2007 4:13:29 PM , Rating: 2
This is common practice these days, and so AMD doing this sort of bond issue doesn't indicate any particular genius on the part of the CFO.

As far as share dilution is concerned, it's primarily the current bondholders who are getting shafted as their debt now moves further down the pecking order if AMD were to go bankrupt, but since they don't have a vote on things then no one cares what they think.


RE: So much we dont know
By AntDX316 on 5/1/2007 9:10:45 PM , Rating: 2
ive never felt sorry for a business before until i read this article... it just makes me want to try and help them even them im all intel :D


RE: So much we dont know
By herbiehancock on 4/30/2007 10:06:06 AM , Rating: 5
Well, AMD put itself into so much debt for what appears to be several reasons.

First, I'm sure AMD didn't count on C2D being so successful or powerful a processor...and good enough of an overclocking cpu to induce large numbers of enthusiasts, a lot of whom were running A64 cpus, to switch over to C2D.

Second, AMD began the acquistion of ATI well before Intel released the C2D processor lineup. And it's generally acknowledged that AMD didn't acquire ATI for its dedicated gpu graphics expertise, but instead its integrated gpu set. AMD seems to have been quite unable to develop on their own a decent gpu for motherboard chipsets.....which is another area AMD has always been weak in.

I've always wondered why AMD never released mb chipsets unlike Intel, which ALWAYS releases chipsets with each new processor release....although it did try once, and was an utter failure at that. After all, to develop a cpu, one has to have a chipset to run the darned thing on to test functioning under operating systems. You cannot develop a cpu sans chipset.

But AMD persisted in having third parties develop/make chipsets for AMD-compat. motherboards. This is one area where AMD basically gave away sales and profits. (Hint: this is an area that Intel makes big profits.....all the chipsets they sell to the 3rd party motherboard makers....such as the 965/975 chipsets. The core chips on each and every 965/975 motherboard, no matter the maker of the mb, was sourced from Intel. So Intel could more easily withstand a drop in cpu profits because they had their profit stream from their chipset sales.....as it always has been.

Third....you call them "so0called analysts." But, since you are in no position to purchase 10 shares of anything, even a penny stock, much less 10K shares, the true investors in the stock market, those looking for stable companies that yield good returns on the stock, look to the professional analysts for guidance in what is good to buy and what is to be avoided. If I were to think about plunking down $140K in a stock purchase, it would be after doing appropriate research from a professional analyst and pretty much ignoring the "AMD will kill Intel" pronouncements form forum kiddies such as yourself.

Those analysts research a company and make recommendations depending upon long-term growth potential and stability. Right now, AMD has little to show for either except for hemorrhaging cash.

AMD's acquistion of ATI was not seen as a very positive move for the company despite what the internet forums said. It took a huge amount of debt to acquire ATI, no way to pay it off, and now look at what the end result has been.

No new product from ATI....instead letting nVidia establish itself with release after release of DX10 compatible parts. No ATI parts seen yet.....and that's partly due to Ruiz and AMD being unable to restrain themselves from letting ATI function as an independent arm of ATI but instead having to tinker and micromanage every move ATI makes. The R600 video card release has been delayed so many times that AMD/ATI has lost a lot of momentum in the graphics marketplace to nVidia, lost market share to them, and may not recover any time soon.

I also find it quite funny that when Intel was stuck with the Netburst cpus, a lot of people thought that Intel was always going to be inferior to AMD.....what did you think Intel was doing during those few years they had Netburst cpus out anyway? Playing shadow puppets?

No, they were designing several generations of cpu ahead...and the C2D lineup is their first shot.

Of course, Barcelona may be faster than the current Intel cpu out there. So be it....that's the way it's always been. But Intel has already demonstrated TWO steps beyond the C2D line.....and who knows how far they really are in design?

And all the while AMD is still trying to get 65nm yields up and has yet to release Barcelona. By the time AMD gets it out, Intel will be at 45nm......and will probably be within a year or so of moving to another new architecture...and even smaller. But, we have the "experts" like OcHungry proclaiming AMD will kill Intel....a sentiment that is not shared by most knowledgeable watchers. I exclude OcHungry as knowledgeable as his fanboy-ism for AMD has shown its ugly head on AT time and time again....despite being shown the facts of Intel's superiority at present over and over....but he continues to spread the AMD FUD despite the truth out there right now.

AMD is in for hard times. I do not envy them. I hope they do manage to weather the storm....they do deserve to stay alive. But Ruiz needs to get AMD's focus back to its core...and dump ATI. It seems to distracting for AMD to have a gpu company to play with.

And, for the record, I've been buying AMD chips since the '90's......my first AMD chip was a 386DX40. Was faster than any Intel 386 cpu at the time. The same was true with AMD's A64 cpus........but I'm now on C2D processors. Since I had to change memory to go to either socket AM2 or 775, it was a no-brainer which to choose.


RE: So much we dont know
By feelingshorter on 4/30/2007 10:33:06 AM , Rating: 2
Your quite right. Back in the day when it was PS2 vs Xbox vs Gamecube, guess whose stock was the best to buy? Nintendo. Although no forum kiddie would of guessed it, but Nintendo has a long track record of performing well, and there were plenty of stock analysis on why Nintendo stocks were worth so much. This all happened way before the WII was announced and it would be too much to type here. If anyone here bought Nintendo back during the Gamecube days, they'd be rolling in money right now, easy to say that now since the Wii released but back then, almost all stock analysis (not couch commanders on forums) said Nintendo was a BETTER buy compared to Microsoft/Sony. Looking at a hardware point of view, who here would have bought Nintendo stock back in the days of gamecube/xbox/ps2? Don't tell me that hardware isn't everything because the Wii is so successful now, most of us realized that AFTER THE FACT.

I feel that AMD got cocky when they bought ATI. They must of felt that their American competitors do nothing all day but sit on their asses, and thats why AMD is now being whooped. That billions of dollars spent on ATI would be great now to use in R&D.

Out of all the graphics manufactures, ATI and Nvidia added together doesn't equal what Intel makes. Funny, if you've never seen the statistics but Intel is the largest graphics manufacture, owning over half of the market place the last time i checked (might be less). Again, like the gamecube/ps2/xbox example, what the end consumer thinks is different from what a stock analysis would think. So AMD thought they could buy ATI, develop an integrated solution, and make more profit on the low end laptops/SFF PCs.

Sounded like a good idea to me too, but then again, like most people, I don't keep track of the market. No one here does either, unless its your job to.


RE: So much we dont know
By jay401 on 4/30/2007 2:33:39 PM , Rating: 2
"Your quite right. Back in the day when it was PS2 vs Xbox vs Gamecube"

Uhm that's hardly "back in the day". More like just a couple years ago. =)


RE: So much we dont know
By ybee on 4/30/07, Rating: -1
RE: So much we dont know
By cochy on 4/30/2007 2:22:07 PM , Rating: 3
quote:
Lenders are often given access to a lot of information that is not publically available and as a result they may have a much better idea about the companys potential than the stock market analysts.


Umm no. A public company such as AMD must disclose the same information to every potential investor in the market place. That includes me and you. This is the law and it's around to make sure no one has an advantage in terms of risk in making an investment into a public company. It's called market transparency.


RE: So much we dont know
By ybee on 4/30/07, Rating: 0
RE: So much we dont know
By melgross on 4/30/2007 4:11:50 PM , Rating: 2
That's incorrect. Only auditors can see information that isn't released to the public.

Seeing a business plan is different. But not financial information.


RE: So much we dont know
By ybee on 4/30/07, Rating: 0
RE: So much we dont know
By ybee on 4/30/07, Rating: 0
RE: So much we dont know
By ybee on 4/30/2007 3:11:52 PM , Rating: 2
What I said is definitely true for bank loans, bit I am not sure how it works for a private debt placement. Do you know if AMD should make the private offering memo publically available at some point?


RE: So much we dont know
By cochy on 4/30/2007 3:19:16 PM , Rating: 2
I'm not an expert so I can't comment any further. Banks will obviously require a lot of information from AMD, such as business plans going forward etc. While this information might not be easily acquired by you and I, I'm thinking it might be available to us by way of market and industry analysts, who make a living on sharing all this information. Market transparency is very important in a free market.


RE: So much we dont know
By ybee on 4/30/2007 3:28:18 PM , Rating: 2
Actually, I am an expert, more or less. I have been involved in quite a few investment banking deals in high-tech (though not in the US) and I know that stock analysts usually dont have a clue whats really going on.

So do not put too much trust in market transparency and analyst expertise.


RE: So much we dont know
By Aikouka on 4/30/2007 11:35:02 AM , Rating: 2
AMD made chipsets in the past (namely the 760 for the Athlon). Although I'm not certain what caused them to stop, I believe it was the competition from VIA where their KT chipsets were speedy and cheap.


RE: So much we dont know
By decapitator666 on 5/1/2007 5:18:18 PM , Rating: 2
AMD has focussed at chipsets before only to launch their cpus faster.. after a new chip was launched, it left it to the other companies to provide the chipsets for it.. thereby ensuring that there was a platform to make chipsets sets for.
and that also led to good relations with the chipset manufacturers, as their would be no real competiton from amd themselves.. a strategy refocus startet withthe acquisition of ATI


RE: So much we dont know
By Andypro on 4/30/2007 12:03:06 PM , Rating: 1
I like your post except for the grammar.

Ellipses (...) are used to indicate an omission, not to denote a natural pause. I'm sorry to point this out, but I think your message would be much more effective if the grammar wasn't so distracting.


RE: So much we dont know
By cochy on 4/30/2007 2:28:33 PM , Rating: 2
According to this article they can be used as such.

quote:
An ellipsis is sometimes used to indicate a pause in speech, an unfinished thought or, at the end of a sentence, a trailing off into silence (aposiopesis).


http://en.wikipedia.org/wiki/Ellipsis

I think you might have been the only one distracted by them.


RE: So much we dont know
By Oregonian2 on 4/30/2007 1:54:49 PM , Rating: 2
Yup. My previous Intel chip had been the 468-50 followed by a long train of AMD chips. Just jumped back last summer to an Intel Conroe chip as well.


RE: So much we dont know
By Targon on 4/30/2007 5:07:58 PM , Rating: 2
AMD has produced chipsets in the past, but has tried to avoid making their own chipsets since their fab capacity needs to be focused on CPUs. The ATI model didn't put a strain on AMD's manufacturing capacity, so it wasn't a problem.

When it comes to profits from chipsets, I don't know if you missed it or not, but ATI chipsets have NOT been doing well, so profits from that business would be small. It will take something VERY good to get more than token support from motherboard manufacturers. Honestly, do you see many motherboard out there that support Crossfire instead of SLI?


RE: So much we dont know
By Ratwar on 4/30/2007 10:22:16 AM , Rating: 2
Your argument has one fatal flaw. You see, AMD wants their stock price to stay out of the bargain bin. Therefore, they'd do things that would positively effect their stock price. If Barcelona has going to be the greatest thing since sliced bread, they would probably be announcing it to the world, since the expectations of a highly profitable future product would raise stock prices. It would also serve the purpose of keeping some people from buying Core 2 Duos now, as they would rather wait for Barcelona.

AMD hasn't been very forthcoming with information. Sure, we've had a few claims about 40% better than Kentsfield, but no user run test. I mean, with Intel's major performance boost offerings, there was specific benchmarks out for quite awhile before release that had been run by third parties (although in a controlled setting). Where are these from AMD? If they have a Death Star waiting in the wings, why hide the sucker?

Still, if AMD survives the price war, they are in a good position. They needed ATI for it's graphics and chipset experience. The chipsets are necessary to compete with Intel's platform sales, such as Centrino. The graphics are with an eye towards the future. Both Intel and AMD see where multi-core PCs are going, large numbers of specialized cores. AMD probably judged that buying ATI was going to be cheaper than developing its own graphics processors and chipset division. So buying ATI was a screwed if you do, screwed if you don't. If they buy ATI, they're in massive debt. If they don't buy ATI, they're either in more debt by having to develop their own graphics and chipsets or they're behind Intel in technology.

I wouldn't mortgage the house to buy AMD stock yet, but if they start pulling a profit in Q1 2008, I think they might be a decent stock (though I still don't think mortgaging the house is a good idea, since that is never a good idea).


RE: So much we dont know
By crystal clear on 4/30/2007 11:16:16 AM , Rating: 1
quote:
Why? You don’t think AMD doesn’t have top notch financial expertise?


AMD now specializes in FINANCIAL ENGINEERING & less on CPUs.

quote:
And does dumb moves putting itself in so much risk


Its a fatal mistake- like AMD admitted in the past of the fatal mistakes they made prefering "OEMs over the Channel" (example).

AMD made fatal mistakes in the past & continues to do so-
AMD always blames Intel for everything now they can start blaming themselves for everthing.


RE: So much we dont know
By ybee on 4/30/2007 11:41:43 AM , Rating: 2
Why are you so excited about this term? Financial engineering is just a technical description for a complex deal like that. I did not invent it - it is widely used in finance.


RE: So much we dont know
By crystal clear on 4/30/2007 11:54:02 AM , Rating: 2
Because it is the exact description of AMD today ...


RE: So much we dont know
By crystal clear on 4/30/2007 12:11:35 PM , Rating: 4
WE call AMD here somewhere in the mediterranean-

Advanced Mounting Debts (AMD)


RE: So much we dont know
By ybee on 4/30/2007 12:15:54 PM , Rating: 2
Thats a good one...


RE: So much we dont know
By Hawkido on 4/30/2007 12:09:10 PM , Rating: 2
quote:
AMD made fatal mistakes in the past & continues to do so-


By definition you cannot make more than one Fatal mistake. The first one kills you.

Otherwise, yeah, AMD has definatly exposed a huge chink in their armor. All Intel has to do is run another vendor blocking manuver to cut AMD out of OEM purchases and AMD will be over. Just like they did when AMD had the superior processor.


RE: So much we dont know
By crystal clear on 4/30/2007 12:17:01 PM , Rating: 2
quote:
By definition you cannot make more than one Fatal mistake. The first one kills you.


Yes by definition you are right-But sometime Lady LUCK saves you .
You survive to make more fatal mistakes.


RE: So much we dont know
By Hawkido on 4/30/2007 12:58:23 PM , Rating: 2
LOL then it wasn't fatal... just stupid.

You cannot survive a fatal accident, you can survive a stupid one.

Just having fun with words no malice intended.


RE: So much we dont know
By crystal clear on 4/30/2007 1:42:55 PM , Rating: 2
quote:
Just having fun with words no malice intended.


Yes indeed-more fun with words :

"fatal"
very serious and having an important bad effect in the future:
He made the fatal mistake/error of believing what they told him.

http://dictionary.cambridge.org/define.asp?key=281...


RE: So much we dont know
By Xavian on 4/30/2007 2:31:16 PM , Rating: 2
Thing is, since AMD vs Intel courtcases have started Intel can't do anything like that. AMD has some safe ground for now, but Barcelona and increased production has to save them, or else.

However, AMD has been heavily investing over the past few years, maybe this is just growing pains?


RE: So much we dont know
By OcHungry on 4/30/2007 10:28:21 PM , Rating: 2
Ottelini’s (Intel's CEO) skim is crystal clear (pond intended) to the anti-trust court. Intel releases a chip that is 15-25% better performer than anything competition has to offer and structures its price in such a way that the competition has to sell its own product @ a loss. Yesterday Intel sold an inferior product (P4) to OEM’s and channels by way of kickbacks, bribery and monopoly, but antitrust caught up on that. Today Intel has changed its monopoly tactic, and does it differently. Sells its product so low that the competition cannot survive the price/ performance ratio, and ends up losing money. The new skim smells as bad the former; it’s all about monopoly, and killing the completion. But AMD has the last laugh. This tactic is exposed and added prove of violation of anti-trust laws. Even if and when anti-trust court forces Intel to reward AMD billions, AMD will not stop producing a better product for the consumer. AMD is about open market, progress in technology and is about consumer, unlike Intel who dresses sheep clothing over the wolf. Better believe it.


RE: So much we dont know
By crystal clear on 5/1/2007 1:10:48 AM , Rating: 2
I am sure all those commenting on this topic want a healthy & strong AMD,because its good for competetion,good for us the buyers,good for computing-No doubt about that.
I personally want AMD to be just that.

Yes things couldnt have been better for the buyer as it is today & year 07.Low prices & high quality Cpus from servers to desktops to notebooks.

I criticize AMD for the lack of a fast response to Intels product offerings.

Why because we need AMD around to compete with Intel in the MARKETPLACE with a product line & not in COURTS with LAWYERS

I criticize AMD for landing itself in such a mess after doing so well till the recent past.

A weak AMD (financially) with a mediocore product line is good for Intel but not for us the buyers-I am sure even Intel wants a strong AMD it makes their(Intel) life more challenging & interesting.

THATS THE REASON I CRITICIZE AMD ! I have ME in my mind-
low prices & even more powerful/faster CPUs


RE: So much we dont know
By Oregonian2 on 4/30/2007 1:47:46 PM , Rating: 2
You go ahead and bet your house on them. Not me. Companies do dumb stuff all the time, and often go bye-bye. Want to buy some DEC stock? They used to rule the world in computers, as well as made the best microprocessors (Alpha) ever invented. Sure company to bet your house on too! Or, if not them, how about Data General?

The trouble with business plans is that the competitors have them too. And those others read differently.


RE: So much we dont know
By tungtung on 4/30/2007 2:48:11 PM , Rating: 2
Well to me it looks like AMD/ATI is just trying to do too many stuff and branching everywhere they could. Just put it simply they are working on too many stuff and announcing more stuff as things drags on. Barcelona is so slowly progressing, R600 was delayed again and again, then they announced the Fusion, in the meantime they're also working on ATI integrated Chipset as well (which we haven't heard any news about for some time).

I only hope AMD/ATI just try to focus on one product first that will sell, then go on the next (similar to what Apple is doing by focusing on iPhone and delaying the OS X). But to be honest I don't think they will close shop anytime soon, the company assets are big enough I think to take these hits for a while. Unless suddenly Barcelona and R600 tanked and noone is buying.


RE: So much we dont know
By vignyan on 5/1/2007 8:58:04 AM , Rating: 2
If you are talking about the analysis of the success, yes... they have a very good finance team... but alas.. no one can predict the market that accuarately... and i dont think AMD expected the losses in the first Q... also it knew that c2d was good but could be battled with by the pice cuts.. the legendry AMD thing... "If not better processors then cheaper processors." but most of the markets have evolved and also the price cuts from Intel added the final assault... and by posting this comment... you just are down grading the market analysts who have much more experience in seeing the company's financials than you do. :)


RE: So much we dont know
By deeznuts on 5/1/2007 1:34:27 PM , Rating: 2
quote:
You don’t think AMD doesn’t have top notch financial expertise?

Sure they do. Just like Enron, Tyco, Worldcom, Peregrine, Adelphia, Global Crossing, and all the airlines except Southwest. Should I keep going?

You, sir, are the naive one. Read up on business history. Private Equity buyout is more then possible, and AMD doesn't really have a choice past a tipping point.


Price war out of control
By tuteja1986 on 4/30/07, Rating: -1
RE: Price war out of control
By James Holden on 4/30/2007 8:22:46 AM , Rating: 2
Where did you read Intel wasn't making a profit?


RE: Price war out of control
By phil126 on 4/30/2007 8:38:45 AM , Rating: 2
Intel made a good profit this last quarter

http://news.com.com/Tax+item+boosts+Intels+quarter...

"Intel said that first-quarter net profit was $1.6 billion"


RE: Price war out of control
By Samus on 4/30/07, Rating: 0
RE: Price war out of control
By Shintai on 4/30/2007 8:59:12 AM , Rating: 2
Get real...double would mean over a 100% gross margin. Thats unheard of.

Intels current gross margin is over 50% and thats very high.


RE: Price war out of control
By Viditor on 4/30/2007 11:49:09 AM , Rating: 2
quote:
Intels current gross margin is over 50% and thats very high

Intel's Gross margins are down over 10% in Q1 07 from what they were a year ago (before C2D revenue), from 55% to 50%...and that's down as well from 59% in Q1 05.


RE: Price war out of control
By defter on 4/30/2007 9:56:27 AM , Rating: 2
And pigs COULD fly.


RE: Price war out of control
By mendocinosummit on 4/30/2007 9:32:15 AM , Rating: 3
Unlike Intel AMD can not not sell millions of chipsets (except for a few ATI's, now called AMD) to offset the low price of their fast selling procs.


RE: Price war out of control
By Oregonian2 on 4/30/2007 2:01:53 PM , Rating: 2
Why not? No fab available?


RE: Price war out of control
By Xavian on 4/30/2007 2:33:22 PM , Rating: 2
What do you think they are getting these large loans for?

that's right, to build more fabs.


RE: Price war out of control
By verndewd on 4/30/2007 5:38:04 PM , Rating: 1
you cant build a fab for 2.2 B. Its for finishing fab 30 and making up for all the wasted silicon that produced the xtx flop and the r630 flop. And to keep their booties afloat while they tinker with designs and accidentally find an architecture that works.

They dont have anything new or exciting to offer as of yet and it takes money to fund the engineering to find a workable solution the the dominant IP of Intel. If doing average everyday x86 is such a problem they should just drop barcelona and get really skinny and work on fusion.

Apparently dx10 and scaling perf on x86 is more than they can handle.


RE: Price war out of control
By ObscureCaucasian on 4/30/2007 8:24:00 PM , Rating: 3
AMD has done exceedingly well given their circumstances in this market. They have always had to sell processors for less money and in much lower quantites than Intel. AMD doesn't have the cash to spend on TV ads and incentives like Intel does. Have you forgotten that AMD has just dominated Intel for several years, Intel on top is a recent change and all we can do right now is wait to see how Barcellona stacks up to C2D, which Intel wouldn't have if they didn't have the resources to pay for multiple design teams.

R600 doesn't seem like it will take the performance crown, but that's of little significance. The uber-high end is a very niche market, it's the mid range that pays the bills.

Fusion seems like a progression towards performance/watt, so I highly doubt it will be anything special from the end users perspective.


RE: Price war out of control
By Master Kenobi (blog) on 5/1/2007 9:37:00 AM , Rating: 3
Thought I would weigh in here to clear up some discrepencies.

quote:
AMD has done exceedingly well given their circumstances in this market. They have always had to sell processors for less money and in much lower quantites than Intel. AMD doesn't have the cash to spend on TV ads and incentives like Intel does. Have you forgotten that AMD has just dominated Intel for several years, Intel on top is a recent change and all we can do right now is wait to see how Barcellona stacks up to C2D, which Intel wouldn't have if they didn't have the resources to pay for multiple design teams.

Not quite. AMD was never "on top". Even at AMD's height of marketshare they had a mere ~26%. Performance wise they were on top for a while due to the unexpected thermal ceiling Netburst hit.

quote:
R600 doesn't seem like it will take the performance crown, but that's of little significance. The uber-high end is a very niche market, it's the mid range that pays the bills.

True to a point, but the uber high end is what gives you brand recognition. People hear that nVidia has the best cards on the market (They do currently), and they buy nVidia cards, not ATI. The average consumer does not know there would be any real differences in which brand is best in a particular bracket.

quote:
Fusion seems like a progression towards performance/watt, so I highly doubt it will be anything special from the end users perspective.

It's not really special from any perspective. It's just a way to stop sticking an IGFX chip on the mainboard, it will simply put it on die with the CPU and memory controller.

Interestingly enough though I would argue for the sake of upgradeability and choice for the consumer, it would be better to move the IGFX to a AM2/3 Socket on the Torrenza platform, rather than putting it on the same die like Fusion. Just my 2 cents there tho.


RE: Price war out of control
By ObscureCaucasian on 5/1/2007 11:16:05 AM , Rating: 3
Sorry, when I said "on top" I was referring to design wise, AMD had much better architecture. They were also able to beat Intel to market with such technologies like dual core and 64-bit computing that was feasable for the destop market. Now that Intel finally has a superior design on the market everyone seems to think that AMD has been "lazy" these past few years.

As for video card brand recognition, the performance crown goes back and forth way too much for the average consumer to follow. If AMD or nVidia make a card that can give system builders a lot of features without a high price, you can bet there will be a lot of systems designed around that card.

As for fusion, I think it is gives the posibility to lower power consumtion and generate less heat. Due to the size of high end GPUs, it seems near impossible to get a really high performing designed around this technology. AMD has already anounced that Fusion will be 2 chips in the same package to allow either CPU or GPU to be easily upgraded without a complete redesign. Basically Fusion will be the successor to integrated graphics.


By CollegeTechGuy on 5/3/2007 4:45:07 PM , Rating: 2
AMDs 64bit CPU was a joke when it came out. Not in the sense of what it was capable of doing, but what it actually did in the comptuer world at the time it came out. Windows was still at 32bit and so was everything else. So you gained no extra benefits for having a 64bit processor. Microsoft did release Windows XP 64bit Edition...which I used for awhile with my Core 2 Duo. Seeing how I didn't use the 64bit edition until the Core 2 Duos came out, it had been out for awhile. Although the time it was out didn't help it any. I could hardly find drivers for my hardware I had, it was like I was using Linux, but worse. And despite software and hardware not being compatible with the 64bit edition, the origional version of XP gave better performance marks.

So anyone that actually tried to take advantage of the 64bit processing actually was hurt by it. And for most consumers they still are. I have not used Vista yet, but hopefully its better for 64bit CPUs otherwise the PC world is still not there yet.

I'll give AMD credit for pushing 64bit computing into the PC world though. But we are still mainly at 32bits.


By Master Kenobi (blog) on 4/30/2007 2:42:00 PM , Rating: 1
He means AMD has never been able to build their own in-house chipset that was widely adopted. AMD typically pairs with nVidia, ATI, or VIA.


RE: Price war out of control
By ScythedBlade on 4/30/2007 8:54:53 AM , Rating: 3
However, the difference between back then and now is that more people know of the AMD "name" brand ...

In addition, Intel will probably bleed AMD to near death, but near death and not absolute death. It definitely wouldn't want US to break up it as a monopoly ... it'd probably be better to stay as an oligopoly.


RE: Price war out of control
By Urbanos on 4/30/2007 9:36:13 AM , Rating: 2
you got that right... its not in intels best interest to destroy AMD,if they did, then the governement would be after them even more... just make AMD the forever underdog... even perhaps get them to the point where intel could maybe buy them?
wouldn't that be a joke.

AMD has been in similiar situations before, i'm sure they can get out of this one, as for ati's part of the job. well, lets hope the fan boys keep buying 'just cuz' cuz right now, ati looks to me like the ones causing the problems.


By ObscureCaucasian on 4/30/2007 8:13:58 PM , Rating: 2
Although it appears that the r600 will not the the performance crown, the medium range is where the bulk of the sales are. The lower end r600 based cards are looking really good for HTPC's and basic Windows Vista graphics power.


RE: Price war out of control
By defter on 4/30/2007 9:58:43 AM , Rating: 2
How many monopolies did US break in the past decade? Remember what happened to Microsoft, it has >95% marketshare and many lawsuits later it's operating like before and is making huge profits...


RE: Price war out of control
By SilthDraeth on 4/30/07, Rating: 0
RE: Price war out of control
By defter on 4/30/2007 10:42:56 AM , Rating: 3
quote:
There are however no free processor alternatives.


However, there are many processor alternatives. VIA makes X86 CPUs, there are hunders of million MIPS CPUs sold every year, Sun and IBM have server CPUs and so on.


RE: Price war out of control
By SilthDraeth on 4/30/2007 1:58:08 PM , Rating: 2
quote:
However, there are many processor alternatives. VIA makes X86 CPUs, there are hunders of million MIPS CPUs sold every year, Sun and IBM have server CPUs and so on.


Exactly. I was just referring to your statement about Microsoft. Besides, when the government gets involved in trying to break up a monopoly it usually ends up worse for the consumer in the end.


RE: Price war out of control
By darkpaw on 4/30/2007 1:59:42 PM , Rating: 2
Other then for very specific apps, I don't think they could give away Via CPUs. Its worse then freeware.


RE: Price war out of control
By Cobra Commander on 4/30/2007 8:59:40 AM , Rating: 2
So AMD's awful business moves (ATI acquisition), lack of promise on upcoming architectures and poor current product are not to blame at all for their financial insecurity? Only the price war? I think there's far more to it than this.


RE: Price war out of control
By defter on 4/30/07, Rating: 0
RE: Price war out of control
By Viditor on 4/30/2007 11:59:22 AM , Rating: 3
quote:
Intel is selling their fastest CPU for about $999 just like before

What they sell the fastest CPU for has never ever made a difference (neither company has ever sold more than a handful of their fastest CPUs)...the only price that matters is the "sweet spot" (the speed that is usually in the middle). For Intel, that price has been cut almost in half (which is why their Gross Margins are the lowest in their history). Of course there's a price war, and it's hurting both companies...haven't you noticed that C2D hasn't helped Intel's share price??


RE: Price war out of control
By defter on 4/30/2007 12:43:37 PM , Rating: 2
quote:
What they sell the fastest CPU for has never ever made a difference


It doesn't make much difference in terms of revenue, but it makes difference in terms of profit margins. Almost all of that $999 price is pure profit, selling one $999 chip brings more profit than selling 10 $100 chips.

When AMD had competitive CPUs in $300-$1000 price range they were making good profits.

quote:
the only price that matters is the "sweet spot" (the speed that is usually in the middle). For Intel, that price has been cut almost in half


How that price has been cut to half? Intel still has many CPUs in the "middle": ~$500 for Q6600, ~$300 for E6700, ~$200 for E6600 and so on. Take your pick.

quote:
(which is why their Gross Margins are the lowest in their history)


In Q1 2007 65% of Intel's production were based on ineffictive Netburst chips and this naturally drove gross margins down. During Q2 and Q3 Intel will replace ~160mm^2 Pentium Ds with 112mm^2 Allendales, this will naturally improve margins.


RE: Price war out of control
By Viditor on 4/30/2007 12:58:15 PM , Rating: 3
quote:
Almost all of that $999 price is pure profit, selling one $999 chip brings more profit than selling 10 $100 chips

While true in theory, the actual factor for sales is in the 10s of thousands...in other words, Intel sells more than 10,000 times as many chips in the sweet spot than at the edge. This makes the highest end quite irrelevant...
quote:
How that price has been cut to half? Intel still has many CPUs in the "middle"

$500 is WAY outside the middle...
For example, take a look at the following NewEgg page:
http://www.newegg.com/Product/ProductList.aspx?Sub...

Now look down the left side at the "price" selection and see how many are in each price level...the VAST majority are between $25 and $200 with a only a very small handfull above that price.
quote:
In Q1 2007 65% of Intel's production were based on ineffictive Netburst chips and this naturally drove gross margins down

Actually, Netburst chips are still cheaper to produce (at least on paper). The reason is that they have far more mature yields, and the equipment that makes them has already been depreciated...


RE: Price war out of control
By bfonnes on 4/30/2007 5:59:17 PM , Rating: 1
I think AMD has relied on "P" ratings far too long. Didn't we decide that people always go for the highest Megahertz/Gigahertz?

like the Tim Allen effect? ho ho ho lol


RE: Price war out of control
By Hydrofirex on 5/1/2007 11:28:03 PM , Rating: 2
I agree, Intel is bleeding AMD dry. Even if AMD can turn it around they need the cash to perform the R&D that is going to keep them a serious competitor.

What if AMD gets a settlement from Intel? Could that even be enough to impact things? Has anyone even considered government intervention to preserve a competitive market place? What if IBM or even Sun eventually buys out a weakened AMD?

This new dual socket co-processor/accelerator platform sounds very, very intriguing... alas, all Intel has to do is throw a tun of money into keeping on AMD's heals with every idea or innovation and keep on the price war. Eventually they will wear them down.

AMD had pretty much better come up with something not only a little difficult for Intel to immediately duplicate, but something truly revolutionary. Necessity is the mother of invention....

HfX


RE: Price war out of control
By MandrakeAU on 5/2/2007 5:35:04 AM , Rating: 2
Who cares if AMD and Intel aren't making as much profit? It's great for consumers! :D High performance, dual core parts for under $200 USD. A year ago that was totally unheard of.


AMD are in trouble..
By teainthesahara on 4/30/07, Rating: -1
RE: AMD are in trouble..
By Viditor on 4/30/2007 12:44:01 PM , Rating: 3
quote:
I dont expect that the Barcelona platform will outperform Conroe that much

I can tell you that you are vastly underestimating Barcelona.
http://www.fudzilla.com/index.php?option=com_conte...
In Sandra multimedia benchmark Agena / Barcelona K10 2.5 GHz scores over 400.000 it/s (instructions / second) in integer test and about 300.000 it/s in floating point test. Yeah there are some Agena / Barcelona parts runing at 2.5 GHz at press time and we got the chance to share the scores with the world.

Intel's fastest QX6800 Quad core at 3 GHz scores about ~300.000 it/s in integer and ~180.000 it/s in floating point test.

So at least in multimedia stuff and this synthetic benchmark AMD's native quad core is 33.3 percent faster than Intel's fastest Quad core, while in the floating calculations it is a massive 66 percent faster.

The QX6850 with FSB 1333 might improve the situation a bit, but it won't be enough save the day. Intel needs to go much higher than 3 GHZ to match the 2.5 GHz K10 part


RE: AMD are in trouble..
By defter on 4/30/2007 12:55:07 PM , Rating: 2
Fudzilla link with synthetic benchmark results: most convincing way of showing superiority of upcoming product!


RE: AMD are in trouble..
By teldar on 5/2/2007 1:43:31 PM , Rating: 3
I think maybe the idea was to give some slight chiding to the completely unfounded and unsupported

quote:
I dont expect that the Barcelona platform will outperform Conroe that much
.

Or is that quote well supported without any links or evaluation of the architecture even though AMD has said they expect over 20% better performance per clock cycle?


As usual... NDA Breakers gets it wrong !
By Beenthere on 4/30/07, Rating: -1
By mars777 on 5/1/2007 5:06:04 PM , Rating: 2
Lesson n.1:
Don't post against Dailytech or its stuff.
Reason: you get voted down.

(i've never seen a single post that refers to dailytech in a bad manner over the 0 :P)


"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer














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