Saturday, July 12th 2008
Bloodbath for AMD at the Stock-Markets, Company Struggles to Survive
Sure, the graphics division brings some cheer for the company but seriously, to what extent is it helping the company alongside a marginally increased market-share with processors? Not much. AMD struggles to survive as stocks plummet below the $6 mark at NASDAQ index, which was priced at $15 /share only a year ago; this is the lowest value for the AMD stock since 2002.
AMD's survival is crucial for the entire computing industry as it keeps check on inflating prices by major players such as Intel and NVIDIA (who themselves are seeing bad days at the stock-markets these days). It has immense engineering potential to take on major players and force them to slash their prices. There are talks already doing rounds of CEO Hector Ruiz planning to quit.
Market forces and mal-informed consumerism are also to blame. A person chooses competitive brands over AMD products mainly because they're supplied and marketed better, sure Intel and NVIDIA do make better products in many categories but 'better' is a very relative value, how much better and for how much more (price) is something that keeps fluctuating, again fluctuations are mainly triggered by competition that AMD brings into the market. In other words, thank AMD for making NVIDIA sell GeForce 8800 GT for as low as $120 or better still, giving rise to a whole new SKU, the GeForce 9800 GTX+, with the '+' matching the red cross on first-aid kits.
Source:
Yahoo Finance
AMD's survival is crucial for the entire computing industry as it keeps check on inflating prices by major players such as Intel and NVIDIA (who themselves are seeing bad days at the stock-markets these days). It has immense engineering potential to take on major players and force them to slash their prices. There are talks already doing rounds of CEO Hector Ruiz planning to quit.
Market forces and mal-informed consumerism are also to blame. A person chooses competitive brands over AMD products mainly because they're supplied and marketed better, sure Intel and NVIDIA do make better products in many categories but 'better' is a very relative value, how much better and for how much more (price) is something that keeps fluctuating, again fluctuations are mainly triggered by competition that AMD brings into the market. In other words, thank AMD for making NVIDIA sell GeForce 8800 GT for as low as $120 or better still, giving rise to a whole new SKU, the GeForce 9800 GTX+, with the '+' matching the red cross on first-aid kits.
116 Comments on Bloodbath for AMD at the Stock-Markets, Company Struggles to Survive
AMD Stands Behind ATI, Write-Downs And All
Melinda Peer, 07.11.08, 7:20 PM ET
Advanced Micro Devices
Advanced Micro Devices on Friday revealed it will take an $880.0 million write-down on the handheld and digital television units it acquired from ATI Technologies, which isn't the first time the semiconductor company has had to lower the value of an ATI-related asset. But the company stood behind its acquisition emphasizing that it's a long-term investment.
The goodwill impairment charge, or lowered book value of an asset, arose after the Advanced Micro Devices (nyse: AMD - news - people ) conducted an analysis of the businesses and determined that they weren't performing to its expectations, making it the second ATI-related write-down that the chipmaker has had to stomach since buying the company in July 2006. BMO Capital Markets Analyst Brian Piccioni estimates that Advanced Micro had $3.2 billion of goodwill and $1.2 billion of intangibles on its books following its purchase of ATI and in 2007's fourth quarter, the company had a $1.3 billion goodwill impairment charge and $400.0 million in intangibles from ATI.
AMD's stock closed Friday down by 12 cents, or 2.4%, at $4.84.
"Although goodwill and intangibles are just accounting plugs, with another $880.0 million of ATI-related write-downs, we believe AMD has effectively written off $3.0 billion (over 50.0%) of the $5.6 billion ATI purchase price in about 18 months," Piccioni said.
But Drew Prairie of Advanced Micro's media relations division, said the acquisition is an essential component of the company's long-term strategy to integrate Advanced Micro's microprocessors and ATI's graphics and chipsets.
"We're the only company now in the industry that has intellectual property in both of those main technologies," Prairie said, pointing to the company's recently launched mobile system and said that eventually, the company plans on integrating the technologies into a single chip.
In July 2006, Advanced Micro acquired ATI Technologies and its arsenal of graphics chips and chipsets for $5.4 billion as a way to better compete with Intel (nasdaq: INTC - news - people ). Analysts had a mixed response to the deal but seemed to agree that while the synergies where there, integration may prove difficult and Advanced Micro would still struggle to gain market share from Intel (see " AMD Makes Its Move").
Advanced Micro said the latest $880.0 million in charges will be recorded in quarter ended on Jun. 28. Also in its second-quarter results, Advanced Micro will record a restructuring charge of $32.0 million related to employee severance and $36.0 million in charges related to short-term investments. Of those charges, $24.0 million were related to the company's investment in Spansion (nasdaq: SPSN - news - people ), a semiconductor device company that specializes in flash memory. The remainder of the investment charge was related to holdings the company had in auction-rate securities.
Offsetting the charges, the company said it will report gains from the sale of wafer fabrication tools that will positively impact gross margin by $190.0 million.
Advanced Micro said it the impairment charges won't necessitate any current or future cash expenditures.
Broker Action: Motorola, Google
Big Banks Spark Rally
source yahoo finance/forbes thread link www.forbes.com/2008/07/11/advanced-micro-closer-markets-equity-cx_mp_0711markets40.html?partner=yahootix
People have always cheered AMD for offering price competitive processors. Yet their manufacturing processes, technology, and scale is far behind Intel so they are cost disadvantaged. If AMD is cost disadvantaged yet sells their processors cheaper, they are going to be out of business in a few years.
right now is a prime time to invest into AMD; if I had the money I definitely would. Their share prices have been relatively stable for the last 6 months now;
Besides, $100 isn't really enough to invest in the stock market. If your broker charges you $10 per trade your stock will need to rise more than 20% before you make any profit.
The only hope AMD has is to deliver a victory in their CPU division similar to what ATI has just done to Nvidia (e.g., a GPU architecture that is significantly cheaper to manufacture and offers vastly superior performance). They have to come out with a processor that is CHEAPER TO MANUFACTURE and offers SUPERIOR PERFORMANCE to Nehalem, and they have to do it within the year. Otherwise the CEO will be forced to resign (he's promised yet not delivered on turning around the company, they continue to overhype and underdeliver on Bobcat, Bulldozer and other CPU designs) and the company will be sold at a 'firesale' to IBM or Samsung.
and the only bad thing would be 1. they go bankrupt.
2-1 odds in my favor :)
IMO, and considering how much AMD has branched out over the last 8 months, I think they've been trying to terminate any major debts that they have . . . which would be a smart move on their part.
also, IIRC, it doesn't cost AMD too much to manufacturer the Phenoms . . . what bit them in the ass, though, was a manufacturing defect that was causing dead cores and another issue with the TLB and L3 cache that caused AMD to stall the Phenoms initial launch, and push motherboard manufacturers to release BIOS updates to address that issue. By the time the Phenoms were finally ready to roll, coupled with the poor reviews they recieved, they just haven't sold all that well.
But, they say bad things come in sets of 3, eh?
Judging by the results of the Denreb engineering samples, it appears that AMD might finally have a CPU that boht OEMs and retail consumers would be very happy with.
Give AMD some time is all I'm saying, they're just in a slump still - every major company will go through a really bad period sooner or later. If AMD was to be finished off, it would've happend a while ago.
The fact that they've survived in a slump for this long, coupled with the fact that they've been able to acquire/merge with the second largest GPU manufacturer, and also branch out into more areas of the tech industry, says to me that they're not going anywhere anytime soon.
I love supply and demand!