AMD Reports $611 Million Loss

mpfife writes "Toms Hardware reports that declining microprocessor sales have pushed AMD deeply into the red. 'The company reported a net loss of $611 million on revenues of $1.233 billion, which is more than 20% below the guidance the company expected at the end of Q4 2006. The loss includes charges related to the ATI acquisition in the amount of $113 million, but is mainly a result of the increasing competition with Intel in the microprocessor market.'"

Comments

Will this lead to Inte monopoly again?

[Reverse Gear]

I wonder if AMD will loose the competition to Intel all together.
Do we risk going back to having only one big CPU producer?

I seem to recall that Solaris is now also based on Intel chips (or was that AMD chips).

I have always been buying Intel CPU's until now, but still I am rather fond of AMD as they have forced Intel to get their act together.

Re:Will this lead to Inte monopoly again?

[Anonymous Coward]

AMD needs to get serious. The new war is CoreWars! They need to be coming out with MORE cores than Intel. They need to price them significantly lower in a core to core comparison next to Intel.

If Intel pops a 4-core, then AMD needs to pop an 8-core, if Intel pops an 8-core, AMD needs to pop a 32-core, and so on. They need to leap ahead and just not try to match core to core. If Intel sells a 4-core for $1000, then AMD needs to sell an 8-core for $800, if Intel sells an 8-core for $2000, then AMD needs to sell a 32-core for $1500, and so on.

Sure they will take a hit at first, but it is the only way to compete with an 800 lbs gorilla like Intel. Soon enough mass production of these N-cores will start paying for itself, but trying to sell premium chips while the war is raging is silly.

Intel will hand them their lunch if they don't raise the bar an order of magnitude. End of story!

Re:Will this lead to Inte monopoly again?

[afidel]

So so wrong. Because it uses lower power ram and is competitive in MIPS/Watt the Opteron is still a better bet for efficient servers vs the Core based Xeon's. Add to that better bus bandiwidth and in four socket and larger systems the Opteron is still very competitive. I can't wait for the quad core Opteron's, a DL585 G2 with four quad cores and 32GB of ram will be a real workhorse, not that the current generation are slackers =)

Re:Will this lead to Inte monopoly again?

[sumdumass]

I don't think this is going to be an issue. There are several problems with AMD's outlook that was mere arrogance or wishful thinking on AMD's part.

AMD has a pretty good product but Intel has been setting the stage for quite a while. You might say that people look at them as the De facto standard. Even When AMD leads in all the products that are comparable to Intel's prducts, Intel still sets the stage.

AMD took for granted that they were leading the pack when they were producing the better performing product. This led AMD to think they could charge a premium for their product and they did. But AMD's has always been a value based seller. Their primary product has been the most performance for the buck spent. This runs counter to the assumption that they were in a position to charge more for their product. It caused sales to slip and made Intel's less performing but more reasonably priced products look better.

Now there are two approaches to setting a price point. One is charging as much as the market will pay and the other is charging less but encouraging more sales to make up for it. Kind of like making $100 per sale in profit and selling two items per year($200) verses making $10 profit and selling 200 per year($2000). AMD went from the second to the first and then recently switched back. There are probably more reasons then just price but it is a key.

The problem with selling cheaper then the competition is that you are seen as second best. A substitute for the good stuff if you will. But Intel has always been the Good Stuff and AMDs reign at the top wasn't long enough in standing to switch this opinion/impression. The tech guys going though the AMD processor problems with the K6-2 and K6-3s are the managers making the buying decisions today. They will always think Intel is the top dog. Everything is rated with "Intel compatible" or "P4 compatible processor" on the sys requirements. Until this actually switches to "AMD compatible AthlonXP 2100 or better" for processor speeds, it will always remain this way.

Once AMD goes back to being the best bang for the buck and Intel needs to have a $999 processor to compete, they will be back to making money and gaining market share. But even if they get the same performance and AMD saves you $200 for the same performance, they will have sales and market shares like history has shown. AMD should be in a lot better shape this time next year. And depending on how they finance their debt this year, they might be back in the black too.

Big AMD Fan here

[rolfwind]

But I have to ask, while AMD were on top with the Athlon for several years - were they just sitting on their laurels?

Re:Big AMD Fan here

[seaturnip]

The truth is that the Core Duo's architecture has been in the pipeline for a long time at Intel, and their years of work are paying off now.

Re:Big AMD Fan here

[snuf23]

The Core chip series is based off the Pentium M which was initially created to be a better low power notebook chip than the Pentium 4M. Intel cancelled further chip plans based off the Pentium 4 when it became clear that the architecture would not scale up in GHz as anticipated and was resulting in other problems (excessive heat, huge power usage). Power usage and heat generation also became a driving force in server purchases due to increased cpu per rack densities (such as in blade servers). Yes Core was a long time in the making but no Intel did not initially mean for it to be their flagship desktop processor.

This sucks

[Anonymous Coward]

I like AMD .. they innovate .. they compete .. and best of all they ensure that Intel keeps innovating too.

Re:Well there's a reason

[Anonymous Coward]

The gaming market is a very minor factor in the CPU race. I doubt it has anything to do with AMD's losses.

Re:Will this lead to Inte; monopoly again?

[WillAffleckUW]

Not if investers are smart. Duopolies are the next best thing to having a monopoly, meaning it has fat profit margins.

We call that an oligopoly, actually. A duopoly is just a form of it. The market can exist with one monopoly, an oligopoly with competitors who do not compete (either thru blatant signals, established contracts, territorial agreements, or price fixing), an oligopoly with minor competition (what has existed for many years with Wintel and AMD since the fall of Motorola's dominance), a mixed market (usually little regulation, almost as efficient as a properly regulated competitive market), a competitive market (regulated), or a hyper-capitalistic market (which usually crashes and players don't survive long, and thus is less efficient in practice).

But investors, as a class, are not smart. They tend to have a hard time selling on loss, and overbuy on profit. This is why ETF funds should do better than most directed funds, and why mutual index funds outperform almost all investors.

AMD: Try listening to your customers

[BillGatesLoveChild]

AMD was founded by Jerry Sanders, a high-flying salesman originally from Intel who never quite fitted in. In Andy's Grove's Bio of Intel, he describes Sanders as fast and loose and the AMD corporate culture akin to a Las Vegas Casino: Very extravagant and over the top. Nevertheless, AMD did produce some killer products which at the time made life hard for Intel.

AMD successfully played the market well, offering very fast CPUs for cheaper than Intel could muster. But recently they dropped the ball. Not only have they not come up with an answer to Intel's Core Duo, but AMD have been doing some bizarre stuff like taking over ATI, then announcing they would build DRM into ATI graphics cards. http://www.infoworld.com/article/07/03/28/14OPcurv e_1.html How is that going to reverse a declining market share? AMD should learn from the disaster Intel faced a few years ago when it wanted to build a CPUID into their chips that would allow tracking of customers. There was a backlash. Now here AMD are doing the same thing, at the same time their market share is declining?

Maybe they (and SONY) should fire their board and create a Slashdot forum to run the company. We could hardly do a worse job!

On the bright side Intel are turning out nice stuff these days and have said they intend to get into the 3D market again. Declining PC sales will hopefully keep their prices down. Even if AMD go down the tubes, we'll be ok... I hope.

Conspiracy Theory # 90...565

[postmortem]

AMD is throwing itself and ATi in the pit, so nVIDIA can buy them both, as originally planned.

Slashdot is a little biased reporting this

[Myria]

Slashdot has an advertising section disguised as "Opinion Center" paid for by Intel. Slashdot is now worthless for hearing AMD news.

Re:Let's hope they recover

[Chandon Seldon]

If they rose prices too high, a competitor could undercut them.

There are only two companies that legally *can* compete with Intel in the x86 processor market: AMD and VIA. Intel has a shitload of patents on implementing x86, and it's only through sheer luck that those two companies have licenses for the patents. If AMD goes under, VIA becomes our only hope for competition - and if the C7 is any indicator, Intel would be able to set their price for high end gaming processors for a very long time before VIA even had a chance of catching up.