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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.'"
That brings it up to what? 30,000 or so lost jobs over the last couple of weeks? Definitely not very encouraging.
Though on another note, it's very disappointing to see Gateway abandon AMD in favor of Intel. Considering that the AMD processors have a tendency to 'whoop the crap' out of comparable Intel chips (when you factor in the cost, especially) it seems that AMD would've been more logical as a "More bang for the buck" system.
Would anyone like to guess what sort of 'Incentive' was offered by Intel?
'Life is like a spoonful of Drain-O, it feels good on the way down but leaves you feeling hollow inside'
There's not much unexpected here.
The plants being closed were mainly used for foundry business. AMD does not want to be a foundry: the TSMC's of the world do that much better, and AMD wants to focus on their core competencies: processors and flash. The foundry business is almost accidental. It generally comes from AMD spinoffs designing communications and analog IC's who were transitioning to traditional foundries. Now they'll just have to transition faster.
The Gateway move was also not unexpected. Gateway is in lots of trouble. They want their big friends (Intel) to help them out, and so they are demonstrating their loyalty to their big friends.
Bryan
AMD clawed its way up on the merits of its products and zero OEM arrangements. In some ways, not having OEM arrangements is good, since computer manufacturers bully their suppliers down to razor thin margins. NVidia's increasing support for AMD should push things along in the end-user/gaming market, and the new multi-processor chipsets are helping AMD crack a market they've hardly touched - the server market.
The plants they are closing are their oldest plants, and coincide with a reduction in output that has been seen throughout the sector. It is even possible that it was becoming increasing difficult to find current products that these fabs were capable of producing.
This isn't the end of AMD, it just means they won't be posting earnings of 50 cents a share each quarter for a while. Intel's feeling the same crunch, and AMD's still got some decent cash reserves.
Seen any BadMarketing lately?
Our company tried to buy 200 Athlon based systems from Gateway to replace our four year old Pentium Pro machines. They refused to deal at all with us. We couldn't get a configuration we wanted, even though it was clearly possible. They wouldn't give us an extended warranty or upgrade coupons.
Basically, they told us that "businesses don't want AMD, so we won't sell them to you."
Sell computers for my job (in addition to being a full time CS student). I talked to the AMD rep who comes to our store. He had threemajor points:
One: no new processors from AMD anytime soon. Just renaming the processors and removing mention of the Athlon name (AMD 1600 for the 1.2 GHz, AMD 2100 etc).
Two: They are making a killing in the corporate market.
Three: There next big focus area is the laptop market. This will be the only place with "new" AMD processors. Most likely people will see more 1.0 GHz+ AMD based laptop systems soon.
Casual Games/Downloads
AMD isn't a small company, and its processor division is more valuable as a whole than if its assets are dispersed. Even if Intel managed to bankrupt AMD, someone would buy it. And after having bled itself for so long, Intel wouldn't have the resources to pick it up. TI or Fujitsu or NEC or some other happy semiconductor manufacturer would keep the CPUs coming.
This might be a little off-topic, but as far as I see it, the problem with Gateway not being able to support a line of computers that does sell that many, is the support cost behind it. You need AMD-knowledgeable tech support, different MoBos, different assemblies, etc.
Dell, IBM, etc. all have the same problem. And it all seems to be related to the fact that the support costs for a low-margin, low-sales product line is too high. So why are the costs so high? From my experience, it's customer support. Too many people don't know how to use a computer and call (harass) the computer companies tech-support for the most minor of issues.
So I was thinking... let's turn it around. Create a computer company for smart people. Do not offer tech support. Do not offer customer service (outside of basic order processing) Just assemble and ship the product. If you don't know how to use it, don't buy it from us. A side benefit of this idea would be that "hard-core" computer geeks can stop wandering from site to site to build their computers. Since there's little over-head to cover, prices will stay cheap.
The same idea can be applied to ISPs. The major cost of an ISP is the customer support staff to go along with it. I'm sure there's a LOT of people out there that would gladly save 10%-25% of their Internet fee in exchange for having no customer support (since most people-in-the-know don't use it anyway).
Si hoc legere scis nimium eruditionis habes
Everytime I look up their stock report online, there's an accompanying stock analyst report saying how much their stock is undervalued. With education sales, excitement over the new iBooks, and 10.1 finally making OS X an OS that is stable AND resposnive, I expect apple to continue to be profitable through the 4 quarter.
And what apple has that a lot of companies do not have is an energized user base. How many people are really that excited about XP? How about a new Dell computer? These things just don't get people going like in the mac community. We're very enthusiastic about apple products and where they are going.
F-bacher
James Tiberius Kirk: "Spock, the women on your planet are logical. No other planet in the galaxy can make that claim."
I'm not sure about their Malaysian fab, but the one in Austin was only producing Durons at the end, with all of the Thunderbirds coming out of their new Dresden, Germany fab. Dresden was built to encorporate copper interconnects into the chip, and Austin was never upgraded.
Last I heard Dresden wasn't anywhere near capacity, so I guess that it's not too surprising that they would move production over there with their future lines.
What's disappointing to me is not so much that people were laid off - the airlines and AMD were respectively both in dire financial straits before the WTC disaster. The real issue is that rather than making sensible decisions, companies time their layoffs to make it have the least impact on their stock valuation. The airlines reacted now, because, hell, their stock is going to bomb anyway. AMD announces it's going to post a loss and knows it may as well pile on the layoffs, not much more damage. Not only that, but it makes them look like they are "restructuring" which makes investors happy. I worked at a company that was consistently doing poorly, and it was evident from inside the company, but they posted cheery quarterly reports. Then one quarter they lump all of their losses together, lay off a few people, and take it all on the chin. This financial maneuvering is pretty ridiculous and cheats the public and the company's investors.
I think I digressed more than enough there - essentially it's disgusting that companies exploit the WTC disaster to raise their stock valuation. The same way that it's dispicable that the next day senators were tacking missile defense amendments onto critical relief packages (luckily failing) and that Israel attacked a city it had been besieging. A big news item like the WTC disaster essentially blacks out all other news, and the exploitation of that factor was pathetic.