Did you bother to ask if fabless is SO good why didn't AMD spun off its factories earlier? Did you ever ask why AMD clung to its factories until it was on the brink of bankruptcy?
They don't pay billions and billions of dollars, no. They're not paying more than Intel. The costs are split between all of the foundry's customers. So while each of them pays more than Intel pays for its own (for the sake of the argument), because the foundry signs several WSAs, the costs are split between them
Can you point out when AMD GPU division posted results as atrocious as these or could I convice you that AMD CPU division is in dire straits?
Can you point out when AMD GPU division posted results as atrocious as these or could I convice you that AMD CPU division is in dire straits?
Did you bother to ask if fabless is SO good why didn't AMD spun off its factories earlier? Did you ever ask why AMD clung to its factories until it was on the brink of bankruptcy?
Can you say the same for CPU? Kabini might be a very good chip and offer Bobcat levels of success over a course of 3-4 years for AMD. dGPUs don't offer that unless we're talking consoles, which isn't a great concern for AMD given they've already netted all 3 makers for their next gen products.
Holy cow. I had never seen Qualcomm's gross margins before. They damn near put Intel to shame.
You really should read the transcript.
1.49B marketcap now.
1.49B marketcap now.
Christopher J. Muse - Barclays Capital, Research DivisionI guess first question, running through the numbers on your new breakeven at $1.3 billion and $450 million OpEx, it would appear that your target here, gross margin-wise is 35%, 36%. So I'm curious, are we seeing a permanent reset on the gross margin side or how should we think about that?
Devinder Kumar - Interim Chief Financial Officer, Senior Vice President and Corporate ControllerLet me answer that. That's not true. We are not giving guidance either and that's not a statement on either profitability or gross margin. It is really putting in place an expense structure that allows us to break even at the operating income level at $1.3 billion by Q3 2013.
That's what happen when you don't know what to do and put a bunch of incompetents at the investor's Q&A. This is the most moronic statement coming from a CFO I ever saw:
At least this time Rory Read didn't say "execution" 549 times.
QCOM's gross margins are high but not that high. There is something wacky with wikinvest's gross margin data.
For example checkout Intel.
Wikinvest reports Intel's Q2 2010 gross margins as nearly 80% (~78% by eye) and yet that quarter is (still) touted on Intel's website as their "best quarter ever" with 67% gross margins...that's an error of 10% in gross margins for something that should be rather straightforward to capture and regurgitate in a graph as wikinvest does.
But yes, to be sure QCOM's margins are very good and that is the very reason Intel is of course looking to make a home for itself in QCOM's markets. If QCOM can hit >60% margins then so can Intel if it manages the business right.
I don't follow: the analyst asked if 35%-36% was the new gross margin target, and the guy answered no, the new breakeven revenue should not be taken as any kind of target or a revenue/margin guidance. Something he repeated a bunch of times in the transcript. If this is answering the wrong question, how should I interpret it, seems like I'm not getting it either?Ugh, what the hell is wrong with their CFO?
The analysts should not know more than the CFO, and yet the CFO didn't even get the question let alone build confidence that he could answer it if he did get it
The answer was self-evident, hence the analyst's motivation to ask it in the first place, but the fact that the CFO could not address it head-on was worse than him just saying "yes, we intend to live with 10% gross margins"...which would have been bad but not this kind of train-wreck, can't feel myself out of a wet paper-bag, bad.
The CFO needs immediate replacement, someone got promoted who totally does not need to be in that position. AMD cannot afford incompetence at that level in the company.
The market is basically pricing in pure liquidation of the company at this point.
Which seems silly but I've seen this happen before to a hardware company (FSI international) and it made no investment sense to me based on what I knew of the company but that didn't matter, the consensus among investors was that they had zero confidence in the management to turn the company around.
(FSI was recently acquired by TEL, but only after having their stock price undervalue their cash value for nearly 4yrs before TEL decided to buy them out)
Ugh, what the hell is wrong with their CFO?
The analysts should not know more than the CFO, and yet the CFO didn't even get the question let alone build confidence that he could answer it if he did get it
The answer was self-evident, hence the analyst's motivation to ask it in the first place, but the fact that the CFO could not address it head-on was worse than him just saying "yes, we intend to live with 10% gross margins"...which would have been bad but not this kind of train-wreck, can't feel myself out of a wet paper-bag, bad.
The CFO needs immediate replacement, someone got promoted who totally does not need to be in that position. AMD cannot afford incompetence at that level in the company.
I don't follow: the analyst asked if 35%-36% was the new gross margin target, and the guy answered no, the new breakeven revenue should not be taken as any kind of target or a revenue/margin guidance. Something he repeated a bunch of times in the transcript. If this is answering the wrong question, how should I interpret it, seems like I'm not getting it either?
I don't follow: the analyst asked if 35%-36% was the new gross margin target, and the guy answered no, the new breakeven revenue should not be taken as any kind of target or a revenue/margin guidance.
The CFO needs immediate replacement, someone got promoted who totally does not need to be in that position. AMD cannot afford incompetence at that level in the company.
I think what's important is to look at terms of how we're simplifying our product development cycles. And we've talked about this before in terms of creating the reusable IP blocks to create the structure in order to streamline our development and also to lower our cost of that development. We believe with the work of many talented engineers across AMD, their focus is to really streamline that activity, lower that cost and deliver our based set of offerings, and then to build off of that with our reusable IP base in order to go attack those markets. They're adjacent, JoAnne, they're not fundamentally different. These are APU graphics-oriented opportunities that allow us to take solutions like Kabini and like our APU base into those segments at a lower cost base and across the portfolio.
Reusable IP blocks. What can I bolt there and what I can't? Reduce development cycles, by a month or by a year? What are the trade offs in terms of performance? How many reusable blocks AMD is going to have? What's the size of the market AMD is aiming?
Gross margin was 31%, down 15% sequentially, partially due to the $100 billion inventory write-down which adversely impacted gross margin by 8 percentage points. This write-down was the result of lower-than-anticipated future demand for certain products and mainly comprised of the first-generation A-Series APUs codenamed Llano
You never get those answers, not even from Otellini. These are press events.
Of course it's not random, but they may want this particular revenue target in order to have 1) some profit, 2) no profit, or 3) minimalize losses to what they think is a reasonable degree. But they don't want to provide this info, so he has to BS. That's how I see it.It goes towards the point of picking an arbitrary number like $1.3B in the first place.
Ordinarily a CFO does not target a specific break-even value in the absence of factoring in projected revenue as well as projected margins.
Basically what the analyst said was "Mr CFO sir, presumably you did not simply throw a dart and randomly pick '1.3B' as your break-even target, and as such if we number-crunching outsiders run the numbers out for AMD's projected revenues it would appear that your internal models, the one's that guided you to choose 1.3B as your break-even target versus say 1.2B or 1.4B, are based on AMD hitting around 35% gross margins...is this correct?"
And the CFO responded "dur, no, models? projections? uh, no, we just kinda pulled the 1.3B number out of the air in the absence of revenue and gross margin expectations...why do you ask? Is our approach not standard industry practice?"
Analysts "gasp, these jokers really are just throwing up random numbers to see what sticks, smithers release the hounds! and sell out all my longs on AMD, she might not being going down but she sure as hell ain't going back up with this management team"
No, it's not basic math. It's basic math to get 'what gross margin is needed to break even with the given revenue and opex', which is not the same as 'what gross margins are you targetting for/guiding' which could be lower, same or higher (likely one of the former two). The point is the analyst was asking for the latter, and CFO clearly doesn't want to provide that information.The answer was self evident, they intend to shrink the company and make it ready to live with 1.3 billion and 450 million opex. Those were numbers that came straight from the CFO mouth. To get to the gross margins is basic math.
But the analyst didn't want to know that. He could add the numbers. What the analyst was truly asking was if this would be a permanent or temporary target. The analyst was trying to gauge was the confidence on the management in future growth, after future products arrive and some of the changes start to take effect.
Once again, if the company doesn't want to give that information, then you're not supposed to confidently blabber it out.A confident CFO would say something like "we are preparing the company to support these low margins but we have confidence that we will not go lower than that, so you can take this target as a floor". Instead the analysts were left with a WTF answer, he neither confirm his own numbers, nor gave the assurance the analyst was looking for.