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AMD announces plans to toss out its dead weight.

The news coming out of AMD hasn't been on the most positive note in the past few weeks. The company announced in early April that it will cut 1,600 jobs by the end of 2008 representing 10% of its workforce. The reason for the cuts came as a result of steep declines in every business arena that AMD competes.

Four days later, the company's Chief Technology Officer, Phil Hester, stepped down from the company with no replacement in sight.

Today, AMD released even more unsettling news in the form of its Q1 2008 earnings report. As previously forecasted by AMD, revenue fell 15% from the previous quarter to $1.505B and the company experienced a net loss of $358M. Operating losses totaled $264M and the company faced a charge of $50M due to its 2006 acquisition of ATI.

"A seasonally weak first quarter was amplified by a challenging economic environment for consumers and lower than expected revenues of previous generation products, resulting in lower than expected revenues in all business segments," said AMD CFO Robert J. Rivet. "However, we are encouraged by the market acceptance of our Quad-Core AMD Opteron server processors as well as our new chipset and graphics offerings."

After experiencing an entire year of losses, AMD is now looking to restructure its business. The company will now put all of its divisions under the microscope and make the decision to sell off some of its underperforming units in order to become profitable in the second half of 2008.

"It is clear that our business environment has changed from just the second half of last year when we saw some of our non-core businesses on a path to growth and profitability. That is now questionable," said AMD CEO Hector Ruiz.

"As a result, we are embarking on a significant restructuring of our company to address the following: We need to intensely scrutinize all of our businesses in order to ensure that our core x86 and graphics products are on a healthy path to leadership and profitability," Ruiz continued. "We also need to scrutinize our non-core business and see how they fit into our plans toward growth and profitability."

AMD's consumer electronics division could be a prime target for cuts according to Technology Business Research analyst John Spooner. "It makes sense because it's not a core part of their business, and they can’t really afford to focus on consumer electronics at this point," said Spooner. They need to focus on processors for PCs and servers as well as graphics."

AMD is indeed ramping up to unleash a new wave of processors and graphics cards for consumers. As reported yesterday DailyTech, AMD is working on its quad-core 45nm Shanghai processor architecture along with its 6-core and 12-core variants.

On the graphics front, AMD is preparing for the launch of its successor to the Radeon 3850/3870 graphics processors. Radeon graphics processors based on the new RV770 core are expected to debut under the $300 price point.

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No Sympathy Whatsoever..
By z3R0C00L on 4/18/2008 10:53:41 AM , Rating: -1
Much like my reaction to Intel during the Pentium D days.. I have no sympathy whatsoever for AMD.

Their products just aren't interesting at all. Aside from price (and the difference isn't that large to be quite honest) I find AMD to have no tangible benefits in ANY category (save for perhaps certain server configurations) to warrant any sympathy.

AMD is behind for two very good reasons, one if the obvious That Intel is a HUGE competitor and the second is due to an inferior product line. Whether against nVIDIA or Intel AMD lags considerably.

RE: No Sympathy Whatsoever..
By 67STANG on 4/18/2008 11:06:18 AM , Rating: 2
I agree. I would also state though, that when AMD was on their K6 line of processors, they were inferior as well-- but they were the "budget processor" back then. It's when they startled Intel by besting their P4 that they awoke "a sleeping giant". IMHO, they could only hold the performance crown for so long.

I believe it will be years before they "pwn" Intel, they way Intel is besting them right now. But just like a lot of tech competitors, it's a back and forth dominance race.. Same goes for ATI vs. NVIDIA. ATI held the crown for a while, now NVIDIA does. That's the way of things.

Unfortunately for AMD, their purchase of ATI couldn't have been at a worse time and is one of the largest reasons for their struggling at the moment. They simply don't have enough capital to take on ATI's debt and spend the assloads of money it takes to make the most advanced processors.

It will indeed be a while before they do well in anything except the server market.

RE: No Sympathy Whatsoever..
By amanojaku on 4/18/2008 11:16:57 AM , Rating: 2
They simply don't have enough capital to take on ATI's debt and spend the assloads of money it takes to make the most advanced processors.

If I was a retailer and my client offered me payment in assloads... I dunno, I'd ask for a check or credit card.

Great post, btw!

RE: No Sympathy Whatsoever..
By KernD on 4/19/2008 11:16:16 PM , Rating: 1
ATI held the crown for a while

That should read as, "for a very short while", what was it, one year? When Ati had it's 9700/9800 against the lowly 5800FX.

RE: No Sympathy Whatsoever..
By Spoelie on 4/21/2008 5:27:09 AM , Rating: 3
9700pro (12/2002) up till the release of the 6800 (04/2004) was more than a year.

R420 series held up pretty well to NV40, it all depended on the game you were running.

7800 took the crown for the smaller part of a year, but x1900 series took it back for 11 months (january till november, release of 8800)

I would say it has been going back and forth quite regularly

RE: No Sympathy Whatsoever..
By blaster5k on 4/18/2008 11:25:23 AM , Rating: 2
AMD has some great chipsets, making their platforms pretty appealing for some of us. They also still have a lower idle power draw, as shown in the Anandtech article that came out today. This makes them great for home servers and media PCs.

Of course, their graphics offerings have been a bit lackluster and performance per watt of their processors can't compete with Intel. Their mobile platforms are still inferior. And Phenom isn't a very appealing product at all.

RE: No Sympathy Whatsoever..
By Pirks on 4/18/2008 3:23:09 PM , Rating: 3
Speaking of chipsets - AMD offers the best integrated 3D video on the market (780G) and very low priced 45W single and dual cores, so any budget conscious PC builder can get helluva bang for a buck, and AMD, fortunately, realizes this is their strongest argument, and they are going to hammer it into nVidia and Intel, by keeping ahead of them on their 3D manufacturing process front (where's your 55nm chips, greeny boys, doh doh? missed it again, jen sun, 'cause you like it from Intel, huh?)

It points at fairly strong possibility of AMD being first to market with integrated CPU/GPU chip, and IF they can catch up with Intel in manufacturing process with the help from IBM (say hello to 32nm blue otellini ass :P) then maybe they will be okay.

Sooo... by looking at how 780G poops on every competitor including nVidia and how Phenom B3 is rolling out while keeping it price competitive with Intel quads, I say it's too early to bury or hate AMD. They still have some aces up their sleeve, they still have technological leadership with 3D manufacturing process and tight-integrated quads and multicore scalability for enterprise and memory controllers etc - they may survive, who knows. Why hate them? I've built myself a new intel gaming PC, but these days I'm eyeing some 780G sweetness with cheapo dualcore 45W AMD silicon to build an mATX box for my parents - just some internet video stuff, ya know - quiet, CHEAP, no video card ever needed with 780G - look ma, Intel is beaten again! Although for gaming AMD kinda sucks if you want ultimate performance, I agree with that.

I'm just saying that while Intel and nVidia are both pooping on AMD when the best performance is needed - AMD remains very attractive for the VAST majority of PC builders, those who value bang for the buck first and the most! So why hate AMD anyway?

RE: No Sympathy Whatsoever..
By V3ctorPT on 4/18/2008 4:54:09 PM , Rating: 2
I have a 780G mobo... just bought it a week ago for my second pc... bought a X2 2350BE, 2gb of mems and there it goes... cool, quiet and it doesn't break my wallet in electricty bills... Sure intel have excelent processors, but what made me buy this AMD platform was the price and the watts :P. AMD maybe down but i congratulate them for this price/performance/watt chip7 :P

RE: No Sympathy Whatsoever..
By crystal clear on 4/20/2008 9:09:07 AM , Rating: 2
Both you guys should read this-

AMD 780G: Preview of the Best Current IGP Solution

RE: No Sympathy Whatsoever..
By Operandi on 4/18/2008 11:42:01 AM , Rating: 2
I would a agree that its largely their own fault for the situation they are in.

I do disagree though about their products being completely inferior however. When overclocked Phenom has been shown to scale better clock for clock than Core2 in certain situations. Of course it needs more voltage and more cooling but thats still underlying potential there.

To turn things around AMD needs to get 45nm out and clock speeds up and stop missing projected launch dates.

RE: No Sympathy Whatsoever..
By defter on 4/18/2008 1:07:14 PM , Rating: 1
When overclocked Phenom has been shown to scale better clock for clock than Core2 in certain situations.

Thank you for most creative metric for a long time. AMD fans must be desperate, they can't use:
- performance
- performance/watt
- performance/clock
- clock/watt
- overclocking capability
or any other similar metrics, since Intel has a clear lead in those.

Luckily there is "better scalibity clock for clock when overclocked" metric left :)

RE: No Sympathy Whatsoever..
By eye smite on 4/18/2008 1:30:40 PM , Rating: 5
Umm, I'll give you a different metric to look at. Under intense load such as MySQL or grid computing even the older K8 architecture holds it own right there with intel and in some cases surpasses it. You can quivel over benchmarks all you want, but a few seconds difference in benchmarks with the C2 beating the athlonX2 or the phenomX4 is not impressive to me, and certainly doesn't warrant all the bragging that intel fanboys throw out there. In reality, it doesn't matter whether you have AMD or Intel, if the cpu does what you want it to in a time manner condusive to your projects or work, what does it matter? So really what we're talking about is preference more than anything, and if AMD sells their chips at a lower price point than intel, Joe Average walking into circuit city will buy one cause it's the right price. This whole Ford vs Chevy argument is completely a moot point on which one is better.

RE: No Sympathy Whatsoever..
By Master Kenobi on 4/18/2008 1:43:25 PM , Rating: 1
MySQL servers generally don't scale well enough to warrant the type of hardware typically found in the server arena. In either case, processing power is the least of your problems. Usually RAM, and Disk Access time are on the top of the bottleneck list.

RE: No Sympathy Whatsoever..
By defter on 4/18/2008 2:28:19 PM , Rating: 2
Previous poster was talking about Phenom, so we need to look at desktop, not server performance.

So really what we're talking about is preference more than anything, and if AMD sells their chips at a lower price point than intel, Joe Average walking into circuit city will buy one cause it's the right price.

And you can see the consequence of selling slow chips at low prices in the title of Dailytech's news post...

A company cannot survice by contentrating on low-end products alone, just look at VIA.

RE: No Sympathy Whatsoever..
By fxyefx on 4/18/2008 1:44:47 PM , Rating: 2
I think of AMD as having more of a niche role in the semiconductor industry. They're kind of like the x86 flavor of the market that IBM's POWER chips occupy. All these losses they've been racking up I attribute to their mistake of aspiring to be a significant competitor against Intel on desktops and laptops. Their chips are very well designed – for certain server applications and high-performance computing. They aren't well designed for what desktop and laptop users need compared to what Intel has been able to achieve with Core 2. AMD needs to throw away its delusions that it can fight Intel fairly in its own territory. Their chips can and do command much better margins in their Opteron flavors. Instead, they're wasting tons of their production capacity on desktop and laptop chips that end up being relegated to the budget price range, and AMD's financials have been atrocious as a result.

RE: No Sympathy Whatsoever..
By TETRONG on 4/18/08, Rating: 0
RE: No Sympathy Whatsoever..
By wordsworm on 4/19/2008 6:40:14 AM , Rating: 2
Whether against nVIDIA or Intel AMD lags considerably.

nVidia in SLI can't even power dual displays. In some ways, nVidia can't even make it to the races. But in every way AMD competes with nVidia. As I recall, it was nVidia on the hook for crashing Vista, not AMD.

You might think I'm an AMD fan. I run an Intel/nVidia machine. My only regret is going nVidia because of the SLI handicap I hadn't been aware of until it was too late.

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