AMD To Close Plants, Lay off 2300, Lose Gateway

cdrudge writes: "According to this article on CNN, AMD will be closing 2 plants in Austin, TX and also their operations in Penang, Malaysia due to slack demand. 2300 jobs will be cut in the process. The same article mentions Gateway dropping it's 'Select' line of computers. Their 'Select' line of computers were Gateway's only AMD-based systems. A Gateway spokesperson said 'We're consolidating all of our offering behind Intel, which was the biggest part of our mix already.'"

Comments

Not Cool

[BravoXL]

And after reading about the lackluster performance of the new P4 2Ghz this really isn't cool. I hope AMD can stick this one out and get on top.

Highly disappointing

[creep]

I am an avid fan of everything-AMD, thus this announcement is very saddening to me. I really hope that AMD is able to pull things around, I enjoy being able to build new (and powerful) machines for family and friends for less than $400 in some cases.

For Gateway, Intel = cheaper

[Brento]

Here's a quote that stands out in the article:

Separately, embattled PC maker Gateway (GTW: down $0.10 to $6.07, Research, Estimates) said Tuesday it will phase out all of its systems based on AMD processors as part of its broader cost-cutting efforts.

It's cheaper for them to just source Intel CPU's and motherboards than to run two product lines, basically. I'm stunned that the price difference in the CPU alone wouldn't be enough to keep Gateway using AMD, but there you have it. For once, Intel is a cheaper decision.

Re:For Gateway, Intel = cheaper

[Gogo Dodo]

But why is it a cheaper solution? Because less product inventory means cheaper costs? Because Intel gives better marketing help? Because Intel chips are cheaper than AMD? Because if Gateway dropped AMD, Intel would give them better prices? We'll probably never know.

Re:For Gateway, Intel = cheaper

[garcia]

Intel is still not less expensive. It is absolute bullshit to think that AMD wouldn't be a better choice for Gateway to sell.

The problem here is a lot similar (at least in my eyes) to the Pepsi/Coke college thing. Pepsi came on campus here at BGSU and gave them $8 million dollars to take PepsiCo as the main supplier of soft drinks (rather than having both like they did before).

Intel is pulling the same bullshit. They want to squeeze out the competition so they best way to do that is to force large outlets of computers to stick w/one chip vendor.

I consider this very unethical.

I don't know if this is exactly what happened in this case (but I can only assume that it is)

I can't see why people would want to spend more money for less output on an Intel machine when the AMD is tons cheaper and faster.

Yes, yes, we know the public is misinformed and really believes that clock-size is important but price is what gets most people.

AMD still wins there.

Bad choice Gateway.

Re:For Gateway, Intel = cheaper

[phillymjs]

For once, Intel is a cheaper decision.

Perhaps Intel made Gateway an offer they, in their increasingly-desperate financial straits, could not refuse. An offer like, "If you exclusively sell machines based on Intel processors, we'll give you a significant discount over what you'd pay if you offered your customers a choice."

This is a Microsoft tactic from way back, used with great effect to obtain their OS monopoly. The Microsoft File gives a detailed account of them using this tactic to stop Vobis, a German PC maker from offering DR-DOS. Microsoft gave Vobis a huge discount on the then-new Windows 3.x if they would exclusively sell MS-DOS and stop distributing DR-DOS.

~Philly

Re:For Gateway, Intel = cheaper

[MikeTheYak]

What case would that be? A few years ago, the DOJ investigated Intel on antitrust measures. Intel and the DOJ quietly settled out of court; no harm, no fuss. Considering that AMD DOES make an Intel-compatible product with around 20% marketshare, I don't think you can really show that Intel is a monopoly, even if you restrict yourself to looking at Windows-compatible processors.

The previous poster admits that he has no evidence that Intel is doing anything illegal, but assumes that they must be anyway. I find this to be just a teeny bit presumptuous. Intel may have simply offered better terms than AMD. Since Gateway only has to pass the cost of CPUs on to the consumer, I don't think that price/performance is so much the issue as a streamlined manufacturing pipeline and/or a worry about public perception.

I'm no economist

[sllort]

'We're consolidating all of our offering behind Intel, which was the biggest part of our mix already.'

So, because consumer spending is down, Gateway is discontinuing its' discount line of computers. Because consumers want to buy more expensive computers when the economy is in trouble.

I must be missing something.

While the price war has left scars on each company, AMD's wounds have been more severe than its larger, deep-pocketed rival.

Now is the time for Intel to use all of its' financial muscle to crush AMD once and for all. This is capitalism. If Intel can continue bleeding longer by slashing prices below manufacturer cost, AMD will eventually run out of money. Once the economy picks back up, Intel will look out on the sunny pasture of monopoly, where it can play in peace with Microsoft now that the U.S. government has said "OK" to monopolies.

My advice: buy Intel stock.

Re:I'm no economist

[Freedom Bug]

The problem is you're assuming that AMD will run out of cash first.

AMD has about $1 Billion in the bank. Intel has about $7 Billion in the bank. Intel's expenses are about 10 times as much as AMD. So if both companies were to give away their processors, Intel would run out of money first.

The assumption that Intel would automatically win a price war is very questionable.

Bryan

big deal

[TheSHAD0W]

Yes, I heard AMD was going to close 2 fabs, and take a $100 million charge against earnings. I also heard it'd save $125 million a year doing it. Getting your money back in ten months isn't a bad thing.

As for Gateway, most of the people who buy them are the ones who are charmed by the sexy "Intel Inside" logo. Those of us who know better don't buy from Gateway anyway.

Get Real man...

[Win-Developer]

I'd be curious to see how many AMD systems were purchased from Gateway over Intel Systems.

I'd also like to see how many Dell/Micron/other systems in the same price range were sold over the same time period.

Don't be so quick to automatically assume like a jackoff that Intel is behind this. If you're a major vendor like Gateway and people aren't buying your $999 AMD boxes, but instead are buying Dell/Micron/other $999 Intel boxes and are outselling your AMD boxes 2:1(high end 4:1), would you waste money and capital trying to push AMD boxes?

Realize that I have no data to back up my ratios, it's just hypothetical until data is shown to prove otherwise, but realize this...people refuse to buy an unknown. I can't remember how many times I've seen people buy Sony TV's because("it's a Sony, it's the best") whereas a Samsung or Phillips TV might look better and cost less, but people just assume and don't even look at them.

AMD Products

[mach-5]

I will continue to purchase and recommend AMD products for my customers. Just because Gateway is leaving them behind doesn't mean the rest of the world should too. Buy what you think is best, and what you can trust.

I wish people would stop saying the word recession

[Ghoser777]

I remember when Bush kept talking about our economy being on the path to a recession several months ago. It sent chills down my spine everytime he said it. What kept the boom economy of the 90's going was what Alan Greenspan called "Irrational Exuberance" - people where so confident in the economy that they invested more than any economic indicator would have shown.

But now, if we start talking about out economy in a negative manner, we're settings us up for "Irrational Fear," where people think the economy is worse than it really is and pull lots of money out. Just the word recession can get stock holders antsy.

One of the main reasons that several business are now having problems is that a lot of people are holding onto more of their money instead of spending it and putting these people to work. Recession -> hold onto money -> more job cuts -> more recession -> hold onto more money -> ...

I don't have to remind programmers what happens to their apps when they get stuck in infinite loops...

F-bacher

Re:This doesn't mean anything!

[jandrese]

Yes, the extra $400 is worth it to let you forget to install the heatsink.

Granted the thermal protection is a pretty major oversight on AMDs part, but it's not the killer feature in my book. I consider low cost and performance to be the killer features of a processor.

My advice: Install a good heatsink correctly the first time and pocket the difference.

Re:Capitalism in Action

[susano_otter]

The market is always right.

By what standard do you judge that the market is always right? Do you mean it literally? Do you mean it in theory? Do you mean it in practice?

Do you consider the fact that people buy things because they are told to do so by the manufacturer? That the only time a manufacturer needs to consider closing a factory is when they cannot successfully convince people to buy whatever that factory produces?

Are you saying "the market wants more Nikes, therefore it is right that more Nikes be produced and sold"?

I have a difficult time believing that the "market" desire for more Nikes is "right" in any meaningful way.

Re:on Capitalism, or Fair Weather Friends

[Zen Mastuh]

How do you expect these "owners of corporations" to pay their employees, invest in new technology, put money away for the proverbial "rainy day," etc. if they don't make a profit?

You are speaking of Expenses, which are deducted from Revenues to arrive at another figure called Profit, and Capital Expenditures, which are amortized as Expenses over arbitrarily chosen periods of time. My friend, it is time for you to enroll at your local institution of higher learning.

My earlier rant was based upon years of direct experience, observation, and the realities of capitalist dogma. The majority owners of nearly all U.S. corporations make up the richest 5% of the population. The minority owners are middle-class folk like you and I who have 401Ks and mutual funds. Each year, the majority owners place an order for the profit they would like to receive in the next year. Management seeks that level of profit, as Malcolm X would say, "by any means necessary".

They operate on many fronts:

• The memetic front: my bottle of Tylenol© says "Now packed without cotton!" on the label, as if I am receiving some additional benefit from a middle manager's decision to drop the cotton.
• The labor front: slash as many jobs as possible, because the government will pick up the tab for 26 weeks.
• The legislative front: give plenty of bribes^H^H^H^H^H^H political donations, so that your trade association can bring your plight to Congress, ensuring safety from those dreaded hackers.

Great FUD!

[SaDan]

Do AMD processors make a small mushroom cloud when you try to run them without a heatsink? Yes.

Moral of the story: Use a heat sink. Duh.

Tom's review was about as impressive as Consumer's Digest reporting that if you order a new Ford Focus without a radiator, the engine might explode. '

Common sense, people. Sheesh...

Re:And yet more slashes to the crippled workforce

[frank_adrian314159]

look out! We're going to see entrepreneurship skyrocketing!

Yeah. I've met the entrepeneurs wanting to wash my car windows at stoplights. Absorbing 10K+ jobs is not something easily done in a slowing economy nor do most people have the wherewithal (or attributes) to make them successful entrepeneurs. For every 10 businesses started, only 1 succeeds. And for every 10 of those, only 1 survives to hire more than a handful of employees. Entrepeneurship is difficult in the best of times. Doing it while the economy is in a downward spiral, for most people, is a recipe for disaster.

I think that's pretty exciting. There's going to be a lot of innovation over the next few years.

Yeah, I saw that message in my E-mail with the subject line reading "MAKE MONEY FAST", too. I'm sure other folks out there are just as creative...

Slashbots on the Rampage

[Detritus]

I find it highly entertaining to read all of the knee-jerk responses that say that anyone who buys Intel is an idiot, a victim of Intel propaganda or that AMD is the target of a dark conspiracy. In the real world, there are often other considerations in selecting a CPU other than game benchmarks. If you like AMD systems, fine. That doesn't mean that anyone who makes another choice is a luser.

Go ahead, mod me down. I've got plenty of karma points to burn.