AMD needs money?

[dizietsma]

I'm going to say now that I think that new York Fab will either be put on ice or never see the light of day.

 

[Razor1]

http://biz.yahoo.com/bizwk/070306/mar2007pi20070305733798.html?.v=1

AMD looks like its going to miss their revnue forcast.

 

[Sound_Card]

actully FarCry HDR on the number 7 setting was the best HDR ive seen yet. Source HDR sucks, so does fear, and i havnt played oblivion, and my other 2 games Most Wanted and BiA:EiB use Bloom not HDR.

I don't recall FEAR having HDR. It has volume metric lighting, but no HDR. And it's a good thing it does not have it.

 

[3dilettante]

I'm going to say now that I think that new York Fab will either be put on ice or never see the light of day.

AMD wouldn't have many future prospects if they forego a capacity increase.

If the company doesn't want to give up entirely, it would probably pay through the nose for financing that might threaten its future solvency rather than guarantee that it will be overwhelmed by Intel's manufacturing growth.

 

[nonamer]

AMD wouldn't have many future prospects if they forego a capacity increase.

If the company doesn't want to give up entirely, it would probably pay through the nose for financing that might threaten its future solvency rather than guarantee that it will be overwhelmed by Intel's manufacturing growth.

They wouldn't be in this situation if they hadn't bought ATI. The buyout was them going backwards when they should've been going forwards.

 

[3dilettante]

I'm sure AMD wished it had gotten a better deal on ATI, but I think the goal here is some kind of lateral move, rather than a way forward.

The way forward runs right into Intel's core competencies. AMD is not going to get major growth in any established x86 market. The ATI brand associated with Fusion, as others have noted, would likely create a new market segment.

My take at this speculative point:

I seriously doubt Fusion would have the same prestige as high end x86, but the specialized hardware route takes a lot of the pressure off of AMD's process engineers.
AMD still hasn't gotten its 65nm process up to where it needs to be. It can roughly match Intel on density, but the stagnant clock speeds indicate leakage and transistor switch speeds are not optimal.

The heterogenous route allows for cores that don't need to match Intel's stronger process scaling. Considering by the end of the year Intel plans on tentatively starting 45nm production, while AMD might be barely hitting stride on 65nm, AMD can't keep fighting the process fight for every spare picosecond in timing and every spare nm in SRAM density.

In theory, if AMD executed well it might have a chance.
Hopefully, ATI's experience will buy AMD enough time to get established before Intel swamps Fusion's target segments too.
At the same time, if Fusion takes off, AMD cannot allow it to be capacity constrained.

If AMD tries to outsource low-end Fusion to fabs like Chartered and TSMC, it must keep its other x86 volumes high. AMD cannot fab out more than 20% of its x86 production, and Fusion counts towards that total. The emphasis on large server cores like Barcelona is problematic, since it cuts the number of x86 devices produced.

I don't like how things look at present (AMD really needs to get a serious roadmap on the hardware and API front, it hasn't yet), but I don't like how things looked prior to the ATI purchase either.
I'm on the fence on which picture I like less.
The fact neither seems to be executing well, and the corporate PR looks more dubious by the day makes me lean towards agreeing with you.

However, business as usual didn't look all that sweet. Fusion and an improved multi-socket Opteron lineup are much better bets than the established x86 desktop and 1-2 socket server lineup.
They do look like long-shots, however.

 

[Voltron]

AMD wouldn't have many future prospects if they forego a capacity increase.

If the company doesn't want to give up entirely, it would probably pay through the nose for financing that might threaten its future solvency rather than guarantee that it will be overwhelmed by Intel's manufacturing growth.

I don't think AMD will add on debt, unless it's some sort convertible into equity, because other than the interest rates will be too high for comfort, considering the company's current situation.

Either way, I am not sure how building a fab in NY is goiing to improve cost structure. Capacity yes. Cost structure? The only sure fire ways seems go fabless, but that means layingoff a huge percentage of workforce and no company wants to do that. Otherwise, unless they are retarded they would have done it by now.

 

[3dilettante]

I don't think AMD will add on debt, unless it's some sort convertible into equity, because other than the interest rates will be too high for comfort, considering the company's current situation.

I'm thinking AMD is either in a gambling mood or more desperate than to play it safe with debt.
It's already upped the ante with ATI. If it stops now, its gamble won't pay off at all.

In which case, AMD would likely hold onto ATI for a while and then spin it off like it did Spansion.

Either way, I am not sure how building a fab in NY is goiing to improve cost structure. Capacity yes. Cost structure? The only sure fire ways seems go fabless, but that means layingoff a huge percentage of workforce and no company wants to do that. Otherwise, unless they are retarded they would have done it by now.

I think AMD's going for some kind of amalgam of various gambles. It's the Frankenstein's gamble: a Hail Mary pass with a soccer ball.

I don't like the prospects, but I don't think they are letting go and playing safe is no longer an option.

 

[Razor1]

http://timesunion.com/AspStories/st...ESS&BCCode=HOME&newsdate=3/10/2007&TextPage=1


hmm

AMD said in its annual report that the big debt may crimp its ability to borrow more money and pay for $2.5 billion in capital expenditures planned in 2007, most of which is expected to be spent at its Dresden, Germany, operations.

This is what I was saying earlier. Didn't expect its normal expenditure to get cut thats pretty drastic.

 

[Tetramagic2]

They left the hard drive market, notebook/pc market, and at least one other hardware aspect (memory escapes me). They are not going to purchase AMD.

epic

I thought that was funny. If I'm not mistaken the other industry IBM left was RAM production.

I'm sure AMD is regretting purchasing ATI, if they had known Intel was going to start a pricewar afterwards to hurt their margins and make them vulnerable they surely wouldn't have gone through with it. Hector Ruiz is probably going to take the fall for it soon.
I hope private equity doesn't take over, they only know how to do one thing and that is slash jobs. AMD has some really great engineers, and I hope they don't get laid off. Someone with big pockets and a long term plan for the future is what's needed. IBM would be the perfect scenario. They can absorb any short term cash flow problems AMD will have and have the patience to see the massive profit the company is due in the future

Does anyone know if AMD's market cap right now ($7.8B) is taking ATI's valuation into account? or are they still separately traded? I can't help but notice Nvidia is now worth $11B, and could theoretically takeover the combined AMD/ATI.
I think Jen Hsun used to be a AMD employee, and who wouldn't mind taking over your former bosses company?

 

[Geeforcer]

Does anyone know if AMD's market cap right now ($7.8B) is taking ATI's valuation into account? or are they still separately traded?

Since the merger has been complete for some time, the market cap is for the combined company. And to think that they paid $5.6 billion for ATI alone.

 

[INKster]

Since the merger has been complete for some time, the market cap is for the combined company. And to think that they paid $5.6 billion for ATI alone.

Not only that, but Nvidia's market cap is still around the 11 billion mark (close to the same spot of when AMD announced the merger), so the devaluation of the combined AMD/ATI can't be attributed to declining sales.

 

[Razor1]

well market cap can only be looked at during a stock buyout, AMD is worth much more then their current market cap.

 

[INKster]

well market cap can only be looked at during a stock buyout, AMD is worth much more then their current market cap.

Of course.
But it's still an interesting metric, because the stock value is usually a rough indicator of cash reserves.
And this Forbes magazine article is a little upsetting, although a bit short-sighted (it lists only the limited financial "analyst" POV, but not necessarily the technological outlook for the future).

 

[Razor1]

True

 

[Farid]

Two days old, but here's AP take on the financial state of AMD.

 

[Geo]

http://blogs.barrons.com/techtrader...gins-are-headed-higher-this-year-think-again/

Merrill Lynch's Joe Osha's view, which basically boils down to Intel can't afford to annoy their own stockholders enough to do serious damage to AMD, and AMD's cash reserves are nowhere near dire yet.

 

[Farid]

Merrill Lynch's Joe Osha's view, which basically boils down to Intel can't afford to annoy their own stockholders enough to do serious damage to AMD, and AMD's cash reserves are nowhere near dire yet.

I don't read that as Intel can't afford to annoy their stockholders. I mean, his call on INTC is neutral and his closing comment boild down to this:

Making money on Intel shares, Osha says “is going to be tough in the absence of sustainable gross margin improvement.” He says the microprocessor market has become a duopoloy, if a lopsided one. “Intel’s stockholders will be better off whenthe company’s management realizes that and acts accordingly

...

Osha remains Neutral on the stock. “With the likely absence of earnings upside this year, the stock continus to look fully valued to us,” he writes. “Intel’s characterization of 2007 as a transition year for the company applies to the stock as well.”

Which means that he thinks that Intel might continue pressuring AMD, putting gross margin consideration aside for the while.

On the other hand, with this note we learn that Meryll Lynch, as a market analysis company, thinks that Intel actual management want to hurt AMD, and put AMD back in the role of small time player, more than they seek gross margin in the short term.

“The central issue for Intel is always gross margin…We think that Intel is a lot more interested in reducing AMD to its former status than in showing much gross margin improvement this year,” he writes. “Investors looking for Intel to deliver [gross margin] upside are likely to be disappointed.”

...

Intel’s focus right now, he says, “is putting AMD back in its box, and those efforts are going to take precedence over generating any additional improvements to Intel’s gross margins this year.” Any extra margin, he says, will be passed along to customers in the form of lower prices. Intel’s plans, he says, seem to involve AMD cutting its capital spending, perhaps due to reduced access to the capital markets.

Merril Lynch's analyst is relatively confident in AMD for the year, though, despite Intel alleged plans to dwarf AMD no matter what.

He says that while AMD has troubles right now, “it still has a decent product portfolio for this year and enough money to fund its capital spending plans.”

 

[Geo]

But he also says that Intel's management thinks that they can put AMD away in 2007 and return to higher margins in 2008. . . and that he doesn't believe that to be true.

Intel’s plans aren’t going to work out unless AMD backs off.

Hence my comment re stockholders. Will Intel's management be that committed to not providing stockholder value when the price war goes into 2008 without AMD cracking?

 

[Farid]

Hence my comment re stockholders. Will Intel's management be that committed to not providing stockholder value when the price war goes into 2008 without AMD cracking?

Farid's call: Neutral!