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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.'"
But I have to ask, while AMD were on top with the Athlon for several years - were they just sitting on their laurels?
Regardless of your feelings on the Intel/AMD processors, I don't think any one of us wants to envision a world with only Intel making x86 processors. Don't get me wrong, they're doing an excellent job, but just how much of this recent surge was a result of the increased competition from AMD?
I am not an expert. If I am misled in something, please correct me.
For a while there Sun was only using AMD chips in there X86_64 architecture based systems. Very soon they will have Intel based systems available.
We were all warned a long time ago that MS products sucked, remember the Magic 8 Ball said, "Outlook not so good"
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. Solaris is the OS, Sparc is the traditional CPU in their boxes. I forget the true name of the box, but Sun Fire can support AMD CPUs.
Why UNIX?
>I wonder if AMD will loose the competition to Intel all together.
They already have: They talked to the competition and said "Fly, be free!"
I wonder if AMD will loose the competition to Intel all together.
Do we risk going back to having only one big CPU producer?
Not if investers are smart. Duopolies are the next best thing to having a monopoly, meaning it has fat profit margins. However, if it is truely a business that requires economies of scale, then if AMD shrinks down past a certain size, it could risk being left out in the cold. I think this is just a temporary blurp. No need to worry yet. Tech is cyclical, including chips.
Table-ized A.I.
While it is true that they are in a world of hurt right now, they have taken concrete actions that should deliver another round of highly profitable quarters, and their new quad core processors and power consumption ratings should result in their usage in a lot of boxen.
That plus the breakdown of the MSFT monopoly and the Wintel dictatorship (disclosure - I have owned MSFT before, and own I think 400 shares of Intel) with the low cost push and power push for PCs and laptops using processor chips, should mean they will return to profit in short order.
The market always projects 4-6 months ahead, except in Japan and Europe where it tends to project 6-18 months ahead.
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Unless you know precisely what you're going to be doing with such a system (or are living happily with a comparable one right now), I'd recommend against it. You can instead go with a mobile chip - intended for laptops, so they're more efficient - and underclock it. Changing the processor's core speed is a native feature of modern mobile CPUs, so it's reasonably well supported and you can do it "on the fly" (without rebooting into the BIOS). There's a Windows program, whose name I forget, which lets you control the CPU speed, setting via slider the highest it'll go even under peak load and so on. So you can run at the lowest-configurable clock (and voltage) 99% of the time, and when you need the power just turn the knob to 11.
Also, unless you specifically want something small, I'd try to stay away from the microscopic cases. They usually have worse air flow, which means you need more powerful fans, which means more noise. With a bigger case, you have room for bigger but slower fans, which make much less noise. You could even go with an exotic heat pipe setup and just about eliminate fans entirely. This has nothing to do with energy efficiency - the fans are a minimal draw compared to everything else in the box - but usually people with your requirements want something quiet and cool too.
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.
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Competition is always good for the consumer. When one company dominates, there's no pressure, and that company will only marginally improve their products over their previous iteration.
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.
v 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?
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/07/03/28/14OPcur
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.
If you have a real bear of a system, that uses every last watt of that massive 350 W PSU you bought, you could be spending as much as $370 per year. Not to mention the cooling load if you're located in a hot region.
Can you be Even More Awesome?!
AMD is throwing itself and ATi in the pit, so nVIDIA can buy them both, as originally planned.
Yes, I'll buy every processor Apple makes.
Just "gittin-r-done," day after day.
Slashdot has an advertising section disguised as "Opinion Center" paid for by Intel. Slashdot is now worthless for hearing AMD news.
"Screw Sun, cross-platform will never work. Let's move on and steal the Java language." - Visual J++ Product Manager
You just made the most incredibly generalized financial analysis I've ever read. 2/3 their costs? Do you have any idea about fixed vs. variable costs?
I can't believe you got modded up, since its clear that you didn't even bother to take a look at their financials. Impressive though, if you can come to any kind of understanding of a business with two lines of information - profit and revenue. I just hope you're only investing your money.
The AMD/Intel dogfight is about way more than x86 market share...it's about the future of the hardware platform. Intel has always been restrained by competitors who will offer us a user-friendly alternative to whatever Intel and Microsoft are dreaming up. When Intel and Microsoft were pushing the CPUID, AMD refused to go along and Microsoft had to make do with a hardware profile they whip up from the onboard devices and serial numbers. If it was not for AMD, every web site you visit today would be able to read your cpu serial number and log your machine in as a unique visitor. Instead of the RIAA grabbing IP addresses and attempting to identify the user with some cumbersome legal process, they would just log your cpuid and subpoena the corresponding machine. Microsoft is still working to that end with whatever tools they can and they know that they need amd and intel completely and irrevocably in bed with them which they know cannot happen when amd and intel are still bitter competitors. So Microsoft has never done anything to help AMD and hopes that AMD is finally sinking for good.
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 =)
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
No. The $113m is not the equity cost of the acquisition. That gets treated differently for accounting purposes, and doesn't appear in the profit/loss numbers, rather it appears in the capital investment/assets part of the balance sheet. The $113m is "acquisition related charges", which is all the other costs they can think of associated with the acquisition, like paying lawyers and possibly some write-offs of inventory or in-process technology. The numbers generally are rather fungible, and I'm not speaking here with any particular knowledge of the actual acounting treatment used. But, bottom line: No, ATI was certainly not valued at $113m - the number was in single digit billions IIRC.
They better take a SERIOUS fucking look at their L2 cache sizes.
I see Core 2 Duos with 2 megs per fucking core.
I see Turion 64 X2's with a paltry 256K.
That's just the LAPTOP end.
Hey, AMD, wonder why you're not going any fucking where, even though you've had a superior bus?
Remember the Pentium D (Basically a hyped up pentium 3 with 2 megs of L2 cache) that smoked many higher-end Pentium 4s in gaming?
Pay attention! My 640K AMD64 3000+ could be smoking many other machines if it just had a DECENT CACHE ON-DIE!
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.
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.