[Beyond3D Article] AMD Q1 2007 Warning Analysis

Discussion in 'Graphics and Semiconductor Industry' started by Arun, Apr 12, 2007.

  1. Geeforcer

    Geeforcer Harmlessly Evil
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    Well, the corollary of "Real Men own Fabs" is "Real men also know how to run the rest of the company to maximize the benefits of owning fabs."
     
  2. Geeforcer

    Geeforcer Harmlessly Evil
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    Up to $2.2 billion @ "B" rating? The interest rate will be insane. The rumors of private equity buyout must have been unfounded, because this is a huge "We are desperate for cash at any cost" move.

    Can we now officially conclude that ATI deal, the way it was structured, was a boon for ATI shareholders and a disaster for AMD, or do we need even more evidence?
     
  3. Arun

    Arun Unknown.
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    Indeed. It will be interesting to watch the "Interest Expense" category in Q2/Q3...

    Either way, even with high interest rates, this should provide some short-term relief, so they will now be able to last well into the Barcelona generation. On the other hand, this will force them to have higher operating profits to compensate, so it does raise expectations on their new architecture even further...
     
  4. trinibwoy

    trinibwoy Meh
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    http://www.fudzilla.com/index.php?option=com_content&task=view&id=663&Itemid=1

     
  5. Arun

    Arun Unknown.
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    That is largely irrelevant for the desktop market if those higher scores are achieved through better quad-core scaling, however. Aggregate performance is important, of course, but so is per-core performance... If true, it does bode well for servers, however.

    Also, another factor to consider, especially but not exclusively for desktops: even if some applications are quad-core-ready, that doesn't mean they use all 4 cores 100% of the time. What happens if it's single-threaded for 50% of the quad-threaded for the other 50%? This could happen even if the two run in parallel, if the threaded part of the program finishes before the serial one... (and yes, this is a direct result of Amdahl's Law - of course, the algorithm can often be improved to minimize its impact, but that requires more programming effort, which you are unlikely to see in the first PC games capable of exploiting many-cores architectures imo)
     
  6. 3dilettante

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    Sandra's int benchmark actually uses integer SSE ops, so it's not the integer side of the core I was originally addressing.

    Most of the intensive work is still going through the SSE pipelines.

    This is a possible good sign that Barcelona should do well on SSE workloads that scale as well as Sandra does to multiple cores, though I'd take a few sentences about a Sandra benchmark from Fuad with a large grain of salt.
     
  7. zsouthboy

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    Can someone explain this one to me?
     
  8. 3dilettante

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    Sounds like some kind of corporate bond issuance.

    edit:

    The capped call (from wikipedia) seems to reference allowing investors the option to buy the right to buy AMD stock. If it goes up in price, the investors can purchase the stock at the price they paid for the call, and if it goes down, they only lose the value of the premium they paid.
     
  9. jimmyjames123

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    AMD should never have purchased ATI at the time that they did. They should have focused on getting Barcelona to market, then witnessed ATI's performance on getting R600 to market, and then make a decision after that. Now they are stuck with two delayed product lines, and boatloads of debt. On top of that, by combining ATI with AMD, they have made big competitors Intel and NVIDIA even more aggressive and eager to stay on top of their game. It's really unfortunate.

    And ATI should never have tackled so many custom GPU projects for outside vendors like MSFT and Nintendo. ATI was in a clear leadership position with R300, but they were forced to devote many talented engineers to highly custom projects like the Xbox 360. On the other hand, NVIDIA just recycled their 7 series architecture for the PS3 without having to do a highly customized architecture. After all, it's not the video card that sells consoles, it's the other features and games. As a result, ATI had to delay one architecture after another while NV keeps beating them to the punch after R300 generation.
     
    #69 jimmyjames123, Apr 24, 2007
    Last edited by a moderator: Apr 24, 2007
  10. Voltron

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    The convertible is the bond issuance. AMD or investors have the right to convert it to stock if the price of AMD's stock goes above $28 by a certain time.

    The capped call is separate, and is basically a call option that AMD is buying on its own stock which will kick in if the stock price goes above $28. But unlike a regular option, the potential gains are capped at $42. This lowers the option premium that AMD must pay. A<D is saying this is a hedge against dilution if the covertible gets excercised = ie the proceeds from the option could be used to buy back shares.

    a very odd move in my opinion. it is very rare for a company to make such a direct bet on its own stock price, and my might particularly question the wisdom of buying calls when finances are stretched. mayeb it was driven by a desire to appease current investors. If AMD stock get back to $28 again AMD management and investors should just be thankful.

    not that there is any impropriety here, but there is something about it that seems enronian, if i may coin that adjective.
     
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  11. Razor1

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    Isn't there a time limit that the stock has to reach this price though?

    edit ah you already said that lol, that sounds very risky.
     
  12. geekcomputing

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    humm

    I play the stock market and amd just looks screwed.

    my biggest concern is what will amd do w/ all that inventory as intel keeps on cutting prices?

    going into next quarter i see massive losses and a massive inventory write off.
     
  13. Maintank

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    This is ugly and in all my years following AMD the worst I have seen it. Back in the K6 days they were losing like 10s of millions a qtr, not nearly 3/4th of a billion.

    The ATI deal was a terrible idea and done at the edge of a cliff. They are saddled with a delayed R600 and a delayed Barcelona and not enough cash to do anything with them.

    I wouldnt buy their stock nor bonds until they can deliver even a glimmer of hope.
    Intels pricing structure through the summer is going to kill AMDs already pitiful margins. And most likely the R600s will also see depreciation unless they can seriously outperform the 8800 series.
     
  14. Geo

    Geo Mostly Harmless
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    http://biz.yahoo.com/bw/070427/20070427005623.html?.v=2

    Whee, that was damn quick. Suggests pretty strongly that institutional buyers still have a lot of confidence in the long term viability of the company.

     
  15. Geeforcer

    Geeforcer Harmlessly Evil
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    With 6% AND first dibs on all assets if anything goes horribly wrong, it's not a very risky proposition. This move however will cap their share price below $28 for years and year.
     
  16. epicstruggle

    epicstruggle Passenger on Serenity
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    http://www.eetimes.com/news/semi/showArticle.jhtml?articleID=199202315
     
  17. mushroom

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    AMD Financing Terms: Even Stranger Than Expected (AMD)

    "Voodoo Financing"
     
  18. INKster

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    Weird.
    So, if i understand this correctly, the trusts and main backers of this financing deal are making sure they can liquidate the company's assets in case it falls through due to extremely poor sales and accumulated debt, at the expense of current shareholder value ?
    How can they do this ? Or are the institutional shareholders in with the plan too ?
     
  19. BrynS

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    Mercury News is reporting that AMD has cut 430 jobs (2.6% of it's workforce).

     
  20. Sxotty

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