MY ending with AMD

[Darkskypoet]

@viditor: AMD sells all the chips it makes, and does so at some level of profit. That this may not offset continuing investments in FABs, Debt carriage charges, etc is moot. They don't sell many chips for a loss... (K10s... maybe ) and when OEMs are factored in, that don't overclock, AMD matches intel on most of the top selling price points... Same reason why AMD will make money on the 3850 /3870 even though they don't own the high end... (although a 256mb gt would hurt them here... if it shows up in time)

Even if Phenom was the most elite thing since penryn... AMD could not take much more market share away from intel then what they currently hold. All that would happen is ASP would rise. (a good thing) but you'd not see AMD with half the market for years at least. They don't make enough chips. Let Chartered, and UMC or TSMC start making them, and then maybe they'd be able to start moving on up on the market share side of things. Until then, they don't have the product to do so.

 

[Idontcare]

Originally posted by: harpoon84
Eh, Viditor will be fine.

I sure hope so!

He's about the only poster willing to stand up and provide the CPU forum with an intelligible non-pro Intel position in the debates.

(IMO he is not anti-Intel, just decidely pro-AMD when it comes to balancing the anti-AMD postings)

Personally I like the cognitive thinking that goes on here in the CPU forum, by both sides of the debate.

 

[Viditor]

Originally posted by: Idontcare

Originally posted by: harpoon84
Eh, Viditor will be fine.

I sure hope so!

He's about the only poster willing to stand up and provide the CPU forum with an intelligible non-pro Intel position in the debates.

(IMO he is not anti-Intel, just decidely pro-AMD when it comes to balancing the anti-AMD postings)

Personally I like the cognitive thinking that goes on here in the CPU forum, by both sides of the debate.

Thanks for that!
I'm sorry that I haven't had more time to post on the current stuff, but I'm on shuttle flights 2 out of every 3 days right now, with innumerable meetings in between...
I hope to have a few days time to actually read this stuff sometime in Dec.

Happy Thanksgiving to all in the US!

Edit: Oh yeah...and Go Broncos!! (that's one area where I really AM a fanboy!) I used to live in Colorado...

 

[bryanW1995]

Originally posted by: Idontcare

Originally posted by: QuiksilverX1

Originally posted by: Idontcare

Originally posted by: QuiksilverX1
That whole rant about how you don't know who AMD is anymore was about the most lame half-assed attempt at trying to explain why the AMD fanboy in you died after holding out for so long.

Do you remember when Apoppin popped over the ATi/AMD release? That was pretty memorable.

Nope, I missed it. What I miss

Originally posted by: AmberClad
Boo, I missed that. Do tell, do tell .

Well back in the day before R600 release, Apoppin was quite the cheerleader for R600 and he valiantly fought with NVidia crowd nearly single-handedly in many many threads.

For months before R600 release you could not enter the Video Card forum and avoid Apoppin gallantly defending AMD/ATI's honor.

At any rate, when R600 release came to pass and it was a deplorable as the Nvidia camp had been touting, something popped inside Apoppin and he created this thread:

The Real Lessons of the AMD's launch

When all the world's reality of how horrible R600 was had finally weighed down on the poor guy, he just popped as best I can envision it when I read that "end of an era" thread.

In the K10 Barcelona/Phenom run-up I saw striking parallels to our very own CPU forum's Viditor, and felt sorrow for him as I did for Apoppin.

Honestly I was worried Viditor was/has been building himself into the same level of emotional/mental investment into "Phenom must be a success" that I assumed we be seeing a similiar thread started from him titled "Why AMD and me are finished".

At any rate I don't say these things out of lack of respect for these gentlemen, just observations from thread watching combined with a little bit of sympathy for what their world must be like considering how invested they are/were in "AMD will make it all right as rain, you'll see, you'll all see!".

I personally hope their sanity stands up to the pressures the reality of our world continues to insist on imposing into theirs.

I just started reading that thread of apoppin's. In it, paratus said the following:

While this is the first launch of ATI/AMD the R600 is still very much an ATI chip and very similar to the R520 launch.

Our only hope, (on the GPU front) is that AMD cleans up ATIs act and they turn it around for the next launch.

I expect that Barcelona will be a strong competitor to C2D based Anands interviews with AMD folks and certain comments from Kyle over at [ H ]. So I'm not too worried on the CPU front.

What we really need is ATIs execution to be cleaned up.

funny how 6 months can make such a big difference...

 

[trajan2050]

Originally posted by: Viditor

Originally posted by: trajan2050
The only reason AMD's marketshare improved at all is because they are selling their products at a substantial loss. This trend shows no sign of abating. Obviously it cannot go on indefinitely.

This is absolutely incorrect...
If AMD were selling their products at a loss, they would have a negative Gross Profit.
In fact, their Gross Profit for Q3 was $669 Million.

Just because a Company takes a loss for a quarter, doesn't mean they are selling below cost. It means that they have other expenses beyond the cost of making the chips that brings their net profit into the loss category.

They are losing 1.6 billion this year with no end in sight. What matters is the inability to break even. period. If they cannot achieve this within a year or so they will be forced into some very unpleasant decisions by the lack of operating cash. They have said exactly this in their latest SEC filing.

 

[Viditor]

Originally posted by: trajan2050

Originally posted by: Viditor

Originally posted by: trajan2050
The only reason AMD's marketshare improved at all is because they are selling their products at a substantial loss. This trend shows no sign of abating. Obviously it cannot go on indefinitely.

This is absolutely incorrect...
If AMD were selling their products at a loss, they would have a negative Gross Profit.
In fact, their Gross Profit for Q3 was $669 Million.

Just because a Company takes a loss for a quarter, doesn't mean they are selling below cost. It means that they have other expenses beyond the cost of making the chips that brings their net profit into the loss category.

They are losing 1.6 billion this year with no end in sight. What matters is the inability to break even. period. If they cannot achieve this within a year or so they will be forced into some very unpleasant decisions by the lack of operating cash. They have said exactly this in their latest SEC filing.

Sigh...
This is why I think they should make at least some accounting mandatory in todays schools...

Let me explain where you fell off the tracks.
When you do your personal finances, does your tax return show what you actually spent?
Usually not...you take a depreciation for your car, house, standard deductions, expenses for other items, etc...
Of the $1.6 Billion AMD has lost this year, only $371 Million is actual cash...and that amount went to the positive side as of Q3.
If AMD ended the year with exactly the same amount of assets (cash, equipment, etc...) that they started it with, they would show a net loss of at least $1.2 billion in depreciation alone.

 

[smthmlk]

Originally posted by: trajan2050
They are losing 1.6 billion this year with no end in sight. What matters is the inability to break even. period. If they cannot achieve this within a year or so they will be forced into some very unpleasant decisions by the lack of operating cash. They have said exactly this in their latest SEC filing.

I think they lost somewhere around $2.1billion in the last 4 consecutive quarters (Q4.06 Q1.07 Q2.07 Q3.07 ), though this last one wasn't as bad (~400mil vs. ~600mil for the preceeding three). This quarters report should be interesting, given that the barcelona launch that was supposed to be a rose in the distance has come... the only other rose is the fusion stuff, but that was guesstimated to come maybe in 2009, and we all know how AMD keeps to its timelines

 

[trajan2050]

Obviously you are completely naive when it comes to what constitutes disclosure and what AMD's creditors have mandated in the various obligations the company has agreed to. AMD has publically stated there is a possiblity they may not have enough cash to continue operating as they have been. As I previously stated, the ramifications for failing to satisfy their creditors and bondholders are very serious. The company could be liquidated for its various parts being one possibility. This would be up to the discretion of the creditors, who I'm sure are all warm wonderful human beings, not AMD.
The markets are well aware of this risk which is one reason AMD's stock is flirting with new lows.

 

[thekernel]

Originally posted by: Viditor

Originally posted by: trajan2050

Originally posted by: Viditor

Originally posted by: trajan2050
The only reason AMD's marketshare improved at all is because they are selling their products at a substantial loss. This trend shows no sign of abating. Obviously it cannot go on indefinitely.

This is absolutely incorrect...
If AMD were selling their products at a loss, they would have a negative Gross Profit.
In fact, their Gross Profit for Q3 was $669 Million.

Just because a Company takes a loss for a quarter, doesn't mean they are selling below cost. It means that they have other expenses beyond the cost of making the chips that brings their net profit into the loss category.

They are losing 1.6 billion this year with no end in sight. What matters is the inability to break even. period. If they cannot achieve this within a year or so they will be forced into some very unpleasant decisions by the lack of operating cash. They have said exactly this in their latest SEC filing.

Sigh...
This is why I think they should make at least some accounting mandatory in todays schools...

Let me explain where you fell off the tracks.
When you do your personal finances, does your tax return show what you actually spent?
Usually not...you take a depreciation for your car, house, standard deductions, expenses for other items, etc...
Of the $1.6 Billion AMD has lost this year, only $371 Million is actual cash...and that amount went to the positive side as of Q3.
If AMD ended the year with exactly the same amount of assets (cash, equipment, etc...) that they started it with, they would show a net loss of at least $1.2 billion in depreciation alone.

These other expenses included a $475 million R&D budget for last quarter, as well as $365 million in sales and administrative costs. These costs do not go away simply because AMD posted a gross profit, and although you are right that an operating loss isn't the end-all-be-all of figuring out corporate finances, you need to take this into account.

Further, there are several other major problems with AMD's balance sheet. They are carrying nearly as much debt as market cap right now, and they are currently rated as B-negative by Standard's and Poors which is well into junk bond territory. They also aren't carrying a great deal of cash on hand, but I assume you knew that already. They are going to need a lot of cash to pay for fab upgrades and interest on the large amounts of debt they are carrying; money they really don't have to spare.

And AMD is still bleeding red as they still suffered a loss of $400 million last quarter. They can obviously recover from this, but it's a long road ahead.

 

[Viditor]

Originally posted by: trajan2050
Obviously you are completely naive when it comes to what constitutes disclosure and what AMD's creditors have mandated in the various obligations the company has agreed to. AMD has publically stated there is a possiblity they may not have enough cash to continue operating as they have been. As I previously stated, the ramifications for failing to satisfy their creditors and bondholders are very serious. The company could be liquidated for its various parts being one possibility. This would be up to the discretion of the creditors, who I'm sure are all warm wonderful human beings, not AMD.
The markets are well aware of this risk which is one reason AMD's stock is flirting with new lows.

That's me...Mr Naive. :roll:

I think if you look through posts in the forum (or ask some of the other posters, even those that think I'm a Royal Pain), you'll discover that not only do I understand full well, I am in fact a professional investor (amongst other things).
As to your statement of "AMD has publically stated there is a possiblity they may not have enough cash", I think if you do some research that they have said this in every single 10-Q they have ever filed.
Part of disclosure includes making investors aware of what happens if they can't sell any chips. That doesn't mean that anybody actually thinks it will happen, but they have to disclose it nonetheless...

 

[Viditor]

Originally posted by: thekernel

These other expenses included a $475 million R&D budget for last quarter, as well as $365 million in sales and administrative costs. These costs do not go away simply because AMD posted a gross profit, and although you are right that an operating loss isn't the end-all-be-all of figuring out corporate finances, you need to take this into account.

Further, there are several other major problems with AMD's balance sheet. They are carrying nearly as much debt as market cap right now, and they are currently rated as B-negative by Standard's and Poors which is well into junk bond territory. They also aren't carrying a great deal of cash on hand, but I assume you knew that already. They are going to need a lot of cash to pay for fab upgrades and interest on the large amounts of debt they are carrying; money they really don't have to spare.

And AMD is still bleeding red as they still suffered a loss of $400 million last quarter. They can obviously recover from this, but it's a long road ahead.

I agree that AMD's balance sheet isn't pretty right now, but there are several upsides that you haven't included...
1. Even though it has diluted the shares, they now have an additional almost $700 Million in cash.
2. They are due to receive an $387 Million subsidy from the EU for Fab 38
3. They are receiving another $500 Million from Russian company Angstrem for equipment and licenses of their 130nm process.
4. AMD's first real graphics card and chip (the others were holdovers from ATI prior to the sale) is now released, and all the reviews I've seen show me that AMD's graphics income is going to be a monster next quarter (at least compared to all of their other quarters).
5. In AMD's guidance, they have (for the first time this year) said that there's a decnt chance that they will break even this quarter.

At the end of the day, you're right in that AMD's balance sheet isn't pretty at the moment. They definately got hit by a "Perfect Storm"...
That said, if this is the worst part, then AMD is probably one of the most attractive stocks to buy that there is right now...buy low, sell high!

Edit: BTW, as a note to trajan2050...the reason for the current low stock price isn't because "AMD has publically stated there is a possiblity they may not have enough cash" as they do every quarter, it's because they just diluted the shares by 8.1%...

 

[trajan2050]

Originally posted by: Viditor

Originally posted by: thekernel

I agree that AMD's balance sheet isn't pretty right now, but there are several upsides that you haven't included...
1. Even though it has diluted the shares, they now have an additional almost $700
Edit: BTW, as a note to trajan2050...the reason for the current low stock price isn't because "AMD has publically stated there is a possiblity they may not have enough cash" as they do every quarter, it's because they just diluted the shares by 8.1%...

This is a ridiculous assertion. The reason this stock is low is because the company has not performed, is saddled with enormous debt load, has successful competitors eating their lunch, and is losing hundreds of millions a quarter.

 

[Neurodog]

Thanks Viditor.

Very interesting reading your posts.

I'd probably buy another AMD even if it's falling a little behind in performance.

BTW: I'm not a die hard AMD

 

[gOJDO]

http://www.extremefunnyhumor.com/pics/Stupid%20Bush.jpg
No wonder you have elected such a smart president.

 

[thekernel]

Originally posted by: Viditor
Edit: BTW, as a note to trajan2050...the reason for the current low stock price isn't because "AMD has publically stated there is a possiblity they may not have enough cash" as they do every quarter, it's because they just diluted the shares by 8.1%...

Oh come now, I'm willing to entertain a lot, but this is silly. AMD's stock price is due entirely to their disastrous financials. They've gone from over $40 a share in January of 2006 to $11 a share today. You don't see your stock price drop to 1/4 simply because of an 8% dilution of shares, you see that because Wall Street hates stagnation and they REALLY hate red ink.

 

[trajan2050]

Great to see an intelligent response!

 

[Viditor]

Originally posted by: thekernel

Originally posted by: Viditor
Edit: BTW, as a note to trajan2050...the reason for the current low stock price isn't because "AMD has publically stated there is a possiblity they may not have enough cash" as they do every quarter, it's because they just diluted the shares by 8.1%...

Oh come now, I'm willing to entertain a lot, but this is silly. AMD's stock price is due entirely to their disastrous financials. They've gone from over $40 a share in January of 2006 to $11 a share today. You don't see your stock price drop to 1/4 simply because of an 8% dilution of shares, you see that because Wall Street hates stagnation and they REALLY hate red ink.

You must have noticed that I was talking about recent events, as the dilution was over this last week. Pointing out long term drops is a Red Herring (unless you missed the reference).
Additionally, it depends on what you mean by "financials"...
The drop you are pointing out was directly related to the price war, not the ATI acquisition and AMD's individual financials.
Both Intel and AMD dropped like a stone when Intel initiated the price war, and at the time AMD had almost no debt and plenty of cash.

 

[Viditor]

Originally posted by: trajan2050
Great to see an intelligent response!

Thank you...

 

[gOJDO]

@Viditor

How are your $500K AMD stock?

 

[trajan2050]

Originally posted by: thekernel

Originally posted by: Viditor
Edit: BTW, as a note to trajan2050...the reason for the current low stock price isn't because "AMD has publically stated there is a possiblity they may not have enough cash" as they do every quarter, it's because they just diluted the shares by 8.1%...

Oh come now, I'm willing to entertain a lot, but this is silly. AMD's stock price is due entirely to their disastrous financials. They've gone from over $40 a share in January of 2006 to $11 a share today. You don't see your stock price drop to 1/4 simply because of an 8% dilution of shares, you see that because Wall Street hates stagnation and they REALLY hate red ink.

Actually I was thanking the kernel.
No offence.

 

[harpoon84]

Originally posted by: gOJDO
@Viditor

How are your $500K AMD stock?

Damn... you serious? That's a lot of $$$ on the line. Good luck Viditor.

 

[Viditor]

Originally posted by: harpoon84

Originally posted by: gOJDO
@Viditor

How are your $500K AMD stock?

Damn... you serious? That's a lot of $$$ on the line. Good luck Viditor.

Actually, as of about 20 minutes ago it's up to 70k shares (my 3rd largest holding now...).
AMD has always been very good to me, but it's been best when people talked it down a lot.
I just bought 25k shares at AMD's lowest price in 5 years...buy low, sell high!

 

[rchiu]

Originally posted by: Viditor

Originally posted by: harpoon84

Originally posted by: gOJDO
@Viditor

How are your $500K AMD stock?

Damn... you serious? That's a lot of $$$ on the line. Good luck Viditor.

Actually, as of about 20 minutes ago it's up to 70k shares (my 3rd largest holding now...).
AMD has always been very good to me, but it's been best when people talked it down a lot.
I just bought 25k shares at AMD's lowest price in 5 years...buy low, sell high!

Actually the lowest price in 5 years is ~$7. Hope AMD won't get that low this time around and you don't lose your retirement money.

 

[Viditor]

Originally posted by: rchiu

Originally posted by: Viditor

Originally posted by: harpoon84

Originally posted by: gOJDO
@Viditor

How are your $500K AMD stock?

Damn... you serious? That's a lot of $$$ on the line. Good luck Viditor.

Actually, as of about 20 minutes ago it's up to 70k shares (my 3rd largest holding now...).
AMD has always been very good to me, but it's been best when people talked it down a lot.
I just bought 25k shares at AMD's lowest price in 5 years...buy low, sell high!

Actually the lowest price in 5 years is ~$7. Hope AMD won't get that low this time around and you don't lose your retirement money.

Oops...fair call. Make that ~4.5 years, and I agree with your sentiment.

 

[Duvie]

Originally posted by: Hulk

Originally posted by: Viditor
I'd like to clear up a few common misconceptions here if I may...
I have seen these time and again, and if you don't really study the semiconductor industry as I have, it's easy to arrive at them by using "common sense". Unfortunately, they're wrong...

1. "AMD got lazy" - A very common misconception... The fact is that it takes ~5 years and a huge amount of money to create a newly designed chip. It IS possible to cut this time down a bit (say 3.5 years) if you throw a ton of extra money at it (double or triple the design teams while allocating plenty of extra Fab lines to R&D for example).
But for AMD to have a killer replacement of the X2 in place by 2007, they would have had to start it in 2002...
How many of you remember what happened to the economy in general and the semiconductor industry specifically in 2002? That's right...disaster to the bottom line for both Intel and AMD! Intel's share price dropped from ~$35 in Jan 02 to ~$13 in Oct 02, and AMD went from ~$20 to ~$3.50...Both companies had their cash hurt badly because nobody could afford to buy computers anymore.
Of course for Intel, this wasn't such a big deal...they still had many Billions in reserve, stored up over a number of years. But for AMD, launching a new large-scale R&D effort was like pushing a boulder uphill in the dead of winter during a blizzard, while dragging a sled and all the dogs...it was a bit tough.

Now add to that...When Prescott was nearing completion (probably when it first taped out and they could test it, say early 2003), Intel realized that they were about to hit a HUGE wall very quickly. The leakage in Netburst had become much greater than anyone at Intel could have predicted...
So, Intel made the smartest strategic move that they have in their history. They bit the bullet, cancelled a whole slough of projects (like Whitefield, which was to be the first CSI based CPU to be released in 2006/7), and poured ALL of their resources into their existing Core and Core2 projects...the upshot was, they got C2D out in 3.5 years instead of the usual 5 years and there was absolutely NOTHING AMD could do about it...they just couldn't afford those kind of resources.

BTW...I find it quite ironic that many folks feel that AMD is both lazy, and that they made a mistake investing all that money into ATI.
Buying ATI is in essence AMD being highly motivated to not be behind for the next great innovation. In fact they hope to be well out in front (though it sure is painful and expensive to get there...).

2. "AMD has fallen way behind in Marketshare because of C2D" - In point of fact, AMD's marketshare is much higher than it was before C2D.
AMD's current marketshare is 23.5%, prior to C2D it was 21.6% or less...

Great post but I don't understand what you are implying with the last point, #2? It seems that you are implying that the release of C2D was a GOOD thing for AMD since their market share actually increased since the release? I very much doubt that.

I think there is a lag in the market from when a chip is released and when it actually has an effect on market penetration and numbers and the statistics you quote are reflecting the lag of C2D market penetration.

I also believe the poster you are responding to is correct in that C2D was a huge hit to AMD. Citing a statistic that seems to negate that fact doesn't change the truth of the matter and that C2D IS the reason AMD is struggling. If Intel had continued on with the Netburst and there was no C2D AMD would be flying high right now.

I agree...MOst of the people I saw buying pCs 6-9months after I got my first C2D were buying the low end budget jobs at DELL, best buy, circuit city, etc and most of them were older celerons, X2's, and Core duo laptops.....not C2Ds. Only of the last 2-3 months have I seen more ads for C2D laptops and core celeron architecture.

I bet until the end of this 4th quarter we wont see the real impact of C2D, since phenoms wont have been sold, in OEM systems yet, or at a price point to capture the 90% of the market.....and the C2D will really be uncontested in the market. Give it another quarter to get the results and before you know it Mid 2008 we will see the START of the real damage for AMD and marketshare.

People need to realise us SMUCKS in the "got to have it" hardware forums are far from the norm. we are bleeding edge, and pay far too much for most of our stuff, unlike the majority of the buying public who buy what they need, when they have a need for it, generally dont look to far ahead on their future needs, and think all about the dollar....and not just bragging rights!!!!