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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.
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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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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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.
AMD is throwing itself and ATi in the pit, so nVIDIA can buy them both, as originally planned.
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.
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.
I think that you're overlooking other architectural and production reasons for there being comparably less cache on the Athlon64 dies. My (single-core) Turion64 has 1024 KiB of L2 cache, and came out shorly before AMD shrunk their cache sizes and moved to DDR2 memory.
The issue has two potential causes: one is smaller silicon die space allows AMD to sell more chips to Dell, low-end whitebox builders and enthusiasts, which must also come with the admission that the K8 architecture was never going to hold on to the performance crown after the arrival of Core. The other is that the on-die memory interface with DDR2 memory causes so small a performance gain for having larger L2 cache that it's not even worth the branding pissing contest (and it's also possible that the Turion64 X2 has 256KiB for energy efficiency reasons). If you want to compare the Athlon 64 FX-53 Clawhammer and Athlon 63 3800+ Newcastle -- same generation, clock speed and memory frequency -- at http://www23.tomshardware.com/cpu.html, there is a benefit for having the 1 MiB L2 on the Clawhammer over the Newcastle, albeit a marginal one.
I'll contest that the Pentium D was a Pentium III, but was instead a dual-processor Prestcott Pentium 4 without the HyperThreading capabilities. I'll also contest that your AMD64 3000+ would be a huge amount better for the additional cache. On-die cache was a trick Intel pulled to try and improve the Pentium 4, Pentium 4 Xeon and Itanium perforance, and while it helps performance, I'm not convinced huge L2 cahces are essential.
And I see Core 2 Duos with 1MB L2 cache, compared with Turions with 512K per core... You're just taking the worst-case example, and complaining about it as if it's typical.
Not to mention that Turion X2s have 128K L1 cache, while Core 2 Duos have a paltry 64K of L1. L1 is much more significant than L2.
What's more, L2 cache isn't magic, anyhow. According to benchmarks, the difference between 2MB L2 cache, and 4MB L2 cache, makes AT VERY BEST less than 10% of a performance improvement. http://www.bit-tech.net/hardware/2006/07/14/intel
Actually, it isn't. Core 2 CPUs are Intel's desktop CPUs as well. AMD, OTOH, has a different line of CPUs for their desktops, with, among other things, typically 1MB of cache (in your words) "per fucking core."
No, I don't remember that at all. the Pentium D is the euphemism for a Pentium 4, that they've used just in the past few months now.
People are supposed to accept your theory, because you've shown how you know absolutely nothing about processors? I'll pass. AMD can figure out how to make fast CPUs without your "help." They've just been caught napping, and need time to catch up.
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