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AMD thinks things will turn around in the second half of 2009

AMD has posted its financial information for Q2 2009 and has reported yet another loss. The silver lining to the quarterly loss cloud is that the financials showed some improvement over the previous quarter. AMD also remains optimistic about Q3 and the rest of 2009.

AMD will be releasing new platforms before the end of the year that the chipmaker hopes will help turn its fortunes around. The company will be releasing its new Opteron processor servers, a market that AMD is still very competitive in, and will releases new notebook platforms.

According to EWeek, CEO Dirk Meyer notes that AMD worked on controlling costs in the first half of 2009 and that the cost controlling methods are expected to pay dividends in the second half of the year. Perhaps the largest of those cost-controlling methods was the spinoff of AMD's foundry operations into an independent company.

Meyer said during a call with financial analysts, "With a strong flow of new products and a leaner cost structure, coupled with assumption of modest seasonal growth, we are positioned for a stronger financial performance in the second half of this year."

Among the new platforms for notebooks that AMD intends to let loose onto the market in Q3 2009 are the Tigris platform for mainstream notebooks and an unnamed platform that is aimed at thin and light notebooks.

AMD reported a loss of $330 million for Q2 2009 amounting to $0.49 per share with revenue for the quarter of $1.18 billion. Analysts on Wall Street had predicted a loss for AMD of $0.47 per share with revenue of $1.13 billion. Despite the loss for the quarter, the numbers AMD posted looked better compared to a year ago.

Analyst John Spooner told eWeek, "The chip maker, like its rival Intel, showed sequential improvement in revenue," Spooner wrote. "Unit shipments fared reasonably well, with some improvement in the server space. Thus there are signs that point to AMD's business improving and the company marching toward its goal of becoming profitable (at least on a quarterly operating basis) in the second half of the year."

AMD rival Intel did well for the quarter until the massive EU fine was deducted making for $398 million loss.

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RE: Eeep
By tviceman on 7/22/2009 11:20:24 AM , Rating: 5
Intel's best high end dominates AMD's best high end.

HOWEVER - If I were building a system right now for < $1,000, I'd personally choose to build an AMD system with a phenom 2 x4 processor. The potential money savings with and AMD processor and motherboard can be used towards a better GPU, more memory, or an SSD.

RE: Eeep
By IlllI on 7/22/2009 11:43:11 AM , Rating: 1
even though they are cheaper, some of their chips like phenomII are the same size, or maybe even bigger than the one from intel. i read something from anandtech a few months back about size vs price. intel has the edge in the size category, so can fit more chips on a wafer than amd can

RE: Eeep
By omnicronx on 7/22/2009 12:00:16 PM , Rating: 2
Both Intel and AMD are now on the 45nm process (for the Phenom 2 at least), and have been since the beginning of the year.

RE: Eeep
By Sazar on 7/22/2009 1:05:40 PM , Rating: 1
I believe he was referring to the diameter of the wafer's said chips are being procured from. You are correct about the process size but Intel uses larger wafers and therefore is able to get more chips per wafer than AMD, assuming that the yields are similar.

I believe Intel has been using 300mm for a while and is working on a 450mm wafer. I am not sure if AMD has moved to 300mm yet, but I do know they were on the 8" platters before and were planning on making the switch.

RE: Eeep
By ClownPuncher on 7/22/2009 1:17:45 PM , Rating: 1
AMD moved to 300mm wafers somewhere in 2005 iirc.

RE: Eeep
By erikejw on 7/23/2009 10:00:04 AM , Rating: 1
The Anandtech size thingy was about die size and transistors.
Intel get more performance from a same size silicon size or smaller one and therefore have lower productions costs per chip compared to AMD so if the price was the same for the CPUs Intel would still have a higher bottom line.

RE: Eeep
By monomer on 7/22/2009 1:08:00 PM , Rating: 3
The OP is referring to which shows that the Phenom II 940 has a die size of 258 mm2, while the roughly comparable C2Q Q9400 has a die size of 164 mm2. So for processors sitting in the same price/performance bracket, AMD is using over 50% more silicon than Intel, even though both are on the 45 nm process.

The picture is a little better for the Phenom I 955, which has the same die size as the 940 at 258 mm2, while the comparable C2Q Q9550 has a die size of 214 mm2, so AMD is using only about 20% more silicon than Intel.

RE: Eeep
By IlllI on 7/22/2009 4:51:50 PM , Rating: 3
yes, thank you. thats the thing i was referring to. i just couldn't remember which article it was from

RE: Eeep
By ClownPuncher on 7/22/2009 1:12:23 PM , Rating: 4
PII x4 955 die size - 258mm squared - 758 million transistors
I7 920 die size - 263mm squared - 731 million transistors

The 955 is a smaller chip with more transistors. Both processes(955 and i920) are mature enough to have good yeild ratios. Both are good processors as well.

RE: Eeep
By Lifted on 7/22/2009 3:10:02 PM , Rating: 1
Can't really compare Phenom II to an I7. Different league performance wise. More comparable to the Core 2 Quad series which are a bit smaller.

RE: Eeep
By hyvonen on 7/22/2009 4:09:35 PM , Rating: 1
Yeah, except that i7 920 is a much better CPU. From that Anandtech article:

Unless you’re running applications that are very well optimized for Intel’s architectures, the Phenom II X4 955 is faster than the Core 2 Quad Q9550. Compared to the Core i7-920, it loses hands down although the chip does come close in some games.

Don't compare apples to oranges, dear sir.

Bottom line: gross margins directly point to the CPU_value/manufacturing_cost ratio, and Intel's is much higher.

RE: Eeep
By ClownPuncher on 7/22/2009 5:07:50 PM , Rating: 2
Apples to oranges? More like tasty apples with really tasty apples. Analogies aren't hard.

The discussion wasn't about which was better, it was about which makes more money per sq mm. All I did was list how big the "mid range - high end" entry from each company was. They are both close to the same price, and close to the same size.

We already know the i7 920 is faster, now we move on to other aspects of the industry for our discussion...

RE: Eeep
By AlexWade on 7/22/2009 1:32:13 PM , Rating: 2
Doesn't the Phenom series have L3 cache? That would explain the larger die size.

RE: Eeep
By Motoman on 7/22/2009 11:43:11 AM , Rating: 3
Yup. The balance swings back and forth...the way AMD caught Intel with their pants down in the Athlon era was pretty awesome. AMD's current offerings are pretty good choices, when comparing price-for-performance. I would naturally love to see them take the all-out performance crown again at some point, but the fact of the matter is that vendors make very little sales, and very little profit, from "halo" items...the vast majority of revenue comes from mainstream parts, and AMD is looking really good there.

RE: Eeep
By hyvonen on 7/22/2009 4:13:03 PM , Rating: 1
Correction: in mainstream parts, AMD is looking good for the consumer, but really really bad for AMD. Sure, you can sell chips if you cut price, but how do you make profits then?

End game is near; Clarkdale/Arrandale will be unleashed soon, and cost savings from 32nm will pound AMD to oblivion.

RE: Eeep
By Motoman on 7/22/2009 5:06:53 PM , Rating: 2
Yeah, we've all heard the oblivion part before.

AMD needs to get enough marketshare to actually generate net profit by gaining volume. They aren't selling enough volume to cover their costs at this point...and they can't raise prices, because Intel doesn't have to and they have to remain competitive from a price/performance standpoint. The need for marketshare is what's driving AMD, and gaining marketshare will grant them the opportunity to become profitable.

RE: Eeep
By hyvonen on 7/22/2009 11:20:38 PM , Rating: 2
I'd say market share is almost a pointless metric, since either party can manipulate it simply by changing prices. But, whoever has the best product, as measured by performance/cost (NOT performance/price), controls the game.

Right now it's Intel, and has been since Conroe was released. This, together with very high volumes, has given Intel enough cash to extend its performance/cost lead (through more design and technology R&D). I don't see how AMD could possibly break this vicious cycle.

RE: Eeep
By Operandi on 7/23/2009 12:55:59 AM , Rating: 3
Intel would have to make a mistake (like the P4), become complacent, or AMD would have to have a major break through to have a chance at really breaking that cycle. Most likely they would need a combination of both.

Athlon and Athlon64 were great but AMD missed their chance and failed to answer Core2. Only now with the PhenII do we really have a strong competitor but much of the damage has already been done and AMD has a lot of catching up to do.

Hopefully they can do it, PhenII is a great CPU but AMD needs to consistently and continually improve. they don't have the resources to pull of PhenI and easily recover from it.

RE: Eeep
By Targon on 7/23/2009 7:45:14 AM , Rating: 2
People point to an Intel roadmap and assume that AMD is stagnant and not working on their own developments. People continually assume that Intel will be the first to get to a new manufacturing process node as well, and for the new node to operate well. The problem is that things don't always work out the way people expect.

People looked at the original Phenom, saw it wasn't competitive, and saw AMD fading away due to not having a competitive product in really any price range. The Phenom 2 came out, and poof, AMD could at least compete again. And, people did not expect the Phenom 2 to be able to scale upwards quickly enough to stay in the game.

I am not saying that Intel won't have a better part, or that it won't be faster or anything like that. I am just saying that there have been many times when people have said that the new Intel chip would kill AMD, and yet, AMD has come up with new chips and has found a way to survive.

Intel does not have a great track record for real innovation outside of making better CPUs. The integrated memory controller, x86-64 aka AMD64 instruction set, HyperTransport(point to point bus design implemented with the K8 to allow the CPU to talk directly to other processors or even other devices). These all came from AMD, and it took until the i7 before the integrated memory controller and point to point bus were finally adopted by Intel.

When has Intel really come out with anything REALLY different? Oh, HyperThreading...that is the only CPU technology that is really innovative besides improvements in their CPU designs which is why Intel has the faster chips these days. Virtualization came from both AMD and Intel, so I wouldn't say that either company had the lead there.

The key is, AMD looks at performance from a total platform perspective, and Intel looks at it from the individual component perspective. From time to time, AMD comes back with something that really kicks butt as a result.

Now, if you look at it, Intel has a big hole in their product lines for where they compete. Intel can't make a decent graphics chip. They keep claiming that they are going to, but they just can't do it. Year after year, Intel releases new graphics for their chipsets(not standalone video cards), and each time, people look at what they have made, and find it years behind the Geforce and Radeon products in terms of features and performance.

If NVIDIA fails, AMD would be in the position to cripple Intel in those markets where graphics performance is considered important, and it isn't just gaming computers either.

RE: Eeep
By TomZ on 7/22/2009 11:45:03 AM , Rating: 4
I think you're missing the point. Because AMD has inferior products, they are forced to sell them at lower price points in order to still sell them at all. This pricing eliminates the possibility of AMD earning a profit because of their relatively high cost structure.

So what you describe is fine from a short-term individual consumer perspective, but it is very bad for AMD, because it is only a matter of time before they "crack." They can't keep posting quarterly losses - it will eventually catch up with them. And when it does, that means bankruptcy for AMD. And maybe that forces them to exit the CPU market, which leaves it all for Intel - very bad for everyone (but Intel).

RE: Eeep
By Targon on 7/22/2009 11:43:14 PM , Rating: 2
The problem here is that while AMD may not be competing against the highest end of the Intel product line, the Phenom 2 line is decent for the money.

Basically, if you compare Porsche to Ford, Ford looks really bad, but Ford sells in high volumes, so it balances out a bit. AMD is a platform company, they not only produce CPUs, but also makes GPUs which put Intel to shame. Now, I have to ask, if AMD makes inferior products, why do you think they are selling well in the low to mid range these days?

You also need to look at what has been going on in the overall marketplace. Have you noticed that the economy is in a tailspin? Now, if AMD can hold steady, or even gain a bit compared to last year with how bad the economy is, and how many people are out of work, that is a good sign overall.

Now, take a look back at what AMD has done over the past ten years. Athlon came along, and beat out the Pentium 3 to reach the 1GHz mark first. In fact, the Athlon was so much better than the Pentium 3 that Intel was forced to drop the Pentium 3 and switch to the Netburst design with the Pentium 4.

So, Intel was able to scale the Pentium 4 up, and suddenly, AMD comes out with an on-die memory controller, and the K8 beats out the Pentium 4 for YEARS before Intel came back with the Core line of processors.

It should be noted that most of the claims of unfair business practices stem from these two periods. When AMD had the better product, Intel resorted to unfair business practices which are the subject of the ongoing legal battles between AMD and Intel.

So, Intel has had the lead for a while yet, but then AMD released the Phenom 2 line. Now, Intel is still out in front, but price/performance on the Phenom 2 line is competitive with what Intel has(I have not checked the results of the Intel price cuts yet, but up until at least a few days ago, a Phenom 2 955 was a good buy for the money, and the platform as a whole is competitive when it comes to price).

Now, it should be noted that AMD has been using things like a point to point bus and an integrated memory controller to help performance from a total system platform point of view. Yes, Intel has more resources to throw at any problem, but why is it that Intel has been following the system architecture changes that AMD has come up with, rather than releasing anything really new themselves(except new CPU designs)?

AMD really could return to profitability quickly once the economy starts to turn around. Most small businesses would rather use $350 workstations than more expensive workstations where they can, and do you REALLY see a lot of $350 workstations that are Intel based that are not complete garbage?

RE: Eeep
By hyvonen on 7/23/2009 4:45:18 AM , Rating: 2
Let me point out again that it's not price/performance that matters, but cost/performance. As long as AMD keeps making chips that perform as well as Intel's counterpart, but are bigger AND are built on a lower-yielding process, they can't expect to make enough profits to compete with Intel. And the situation is going to get even worse for AMD when 32nm Clarkdale chips come out.

Consumers only see the price/performance of AMD chips being "competitive" with Intel's, but the real story is in the profit margins.

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain
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