AMD ‘Confident’ Profitability Will Return

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I sure hope this guy is right. I think that it is safe to say that competition drives innovation and the PC landscape would be very different without AMD in the picture.

AMD's EMEA component sales manager Neil Spicer has said he is "confident" the firm can return to profitability in 2016. But speaking with CRN, Spicer said he is sure that profitability will return as long as the company remains true to its core ethos. "From a personal stance, I am confident [we can be profitable]," he said. "I believe we are working with exactly the right customers, and over the last few years we have become much simpler to execute and do business with."
 
Trepidati0n said:
Why are people so concerned with profit...Amazon didn't for 20 years =P
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Yeah, but Amazon had magic fairy dust .com buzz allowing them to keep going back to the market for more funding.

AMD doesn't :p

I think profitability in 2016 is a very optimistic outlook, knowing - as we do - that their new CPU designs won't hit the market until very late in 2016 at best, that there will be inevitable costs to get them there, and it is unlikely one month of sales can put them in the black for the year.

GPU's might help though, depending on when HBM 2.0 models hit the market.

Still, I see 2017 as the first year in the black for AMD, IF they are successful with Zen and K12.

Disclaimer: I'm an Engineer, not a Financial Analyst.
 
Trepidati0n said:
Why are people so concerned with profit...Amazon didn't for 20 years =P
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Investors demand profits - no profits, the investors take their money away. No money, no new R&D. For a GPU and CPU maker, that is a death sentence.
 
When was the last time AMD made a profit? A real profit, not one derived from selling off equipment and business units (global foundries, cough cough).
 
cybrsage said:
Investors demand profits - no profits, the investors take their money away. No money, no new R&D. For a GPU and CPU maker, that is a death sentence.
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Sortof.

If they keep running losses, they will run out of their existing cash, which exists due to previous cash infusions, from stock issues to investors, loans (in corporate bond form, or from banks).

If investors get pissed off due to a lack of profits, they can fire the board, the board can fire the CEO and thus they have the power to demand changes, but they can't get their investment back. They can sell their shares, but will do so at the market price, which is determined in large part by profitability.

Bond holders and creditors have to be paid be paid back with interest.

If AMD continues running at a loss, they will run out of cash. They have already sold off most off their marketable assets to raise cash to continue operating (like their buildings, their fabs, etc.) If cash runs low, they will be faced with four options, get more loans (if anyone is willing to give them loans at this point), issue new stock (if anyone is willing to buy it at this point), sell themselves to someone who can take on their financial liabilities, or just go chapter 11, and possibly go bust.

They have to be able to pay their employees, suppliers and creditors somehow. If they can't make a profit to do so, they cease to exist.

Amazon was able to run at a loss for so long due to the irrational exuberance in the market for so long during the ".com bubble". It almost didn't matter what they did, they'd just go out and say "we are the future of the internet" and investors would throw cash at them. Amazon's investors were relatively lucky. Many other .com investors were not, and lost everything.

In the end, in order to attract new investors (or loans) and thus an operating cash flow you need to be able to excite those wou would lend you money or invest in you with current profits, or at least the promise of future profits. Right now, that would be a hard sell for AMD.

We have a lot of hope for them with Zen in the works and future GPU's, but many investors would look at their past performance and not be willing to take the risk.
 
I wonder if he meant
"We will be profitable by selling off our assets for one positive quarter income"
"We will be profitable because if we aren't, I lose my job and investors."
 
Zarathustra[H];1041963015 said:
Yeah, but Amazon had magic fairy dust .com buzz allowing them to keep going back to the market for more funding.

AMD doesn't :p

I think profitability in 2016 is a very optimistic outlook, knowing - as we do - that their new CPU designs won't hit the market until very late in 2016 at best, that there will be inevitable costs to get them there, and it is unlikely one month of sales can put them in the black for the year.

GPU's might help though, depending on when HBM 2.0 models hit the market.

Still, I see 2017 as the first year in the black for AMD, IF they are successful with Zen and K12.

Disclaimer: I'm an Engineer, not a Financial Analyst.
Click to expand...

There is more than selling CPUs and discrete graphics cards in their portfolio now. We know they have at least 3 contracts with companies to design a custom processor. It's possible one of them releases in 2016.
 
geekcomputing said:
Company is in a rough patch but I think 2017 is going to be one hell of a great year w/ new gpu, cpu products along w/ embedded.
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I really hope so. I like AMD. I wouldn't mind buying a new AMD CPU if it was worth it. I like my GPU's, but if they can't beat NVIDIA by middle of next year, I'll be going green. Nothing against AMD, I really love them, I just want the best I can buy on my budget. That's going to be Intel (again) and NVIDIA (first time since 4600).
 
geekcomputing said:
Sept 14 was the last time they made a profit but they were printing money back in 2012.
https://ycharts.com/companies/AMD/net_income_ttm

Company is in a rough patch but I think 2017 is going to be one hell of a great year w/ new gpu, cpu products along w/ embedded.
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looks like 2007-2009 was significantly worse for AMD than it is now - interesting? we'll see what the next 18 months bring.
 
fuzzylogik said:
looks like 2007-2009 was significantly worse for AMD than it is now - interesting? we'll see what the next 18 months bring.
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That's also when 'the great economic crash' waa as well.

It'd be interesting to see that chart adjusted for inflation and plotted against the consumer price index.
 
I'm encouraged by AMD having an engineer at the helm. By 2017-2018 we'll start to see the fruits of Dr. Su's efforts.

However, Neil's statement is really not very optimistic. A single quarter in 2016 with a penny of profit will meet that standard. Heck, it doesn't even have to be GAAP profit for AMD to claim it is met.
 
The only way AMD will ever return to the powerhouse they once were is if they stop with the bullshit, misdirection and lies when it comes to the performance of their products. Eg, high end video card benchmarks coming from AMD showing their products in an awesome light, but the settings that were used to get those results are settings nobody with a high end card would ever use.

Of course, it's very possible nVidia do this as well, it's just AMD were caught doing it and it's endemic of the bullshit sprouting from their press releases over the past 12 months or so.
 
PiSquared said:
By 2017-2018 we'll start to see the fruits of Dr. Su's efforts.
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Lol. Nice pun!

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AMD has a long list of things to do before they could even dream of being profitable. Build a competitive processor and writing decent drivers for their products are the 2 biggest.
 
This is a meaningless thing to say. He literally can't come out and say "Yeah, I don't think we'll be profitable again."
 
Trepidati0n said:
Why are people so concerned with profit...Amazon didn't for 20 years =P
Click to expand...

cybrsage said:
Investors demand profits - no profits, the investors take their money away. No money, no new R&D. For a GPU and CPU maker, that is a death sentence.
Click to expand...

Investors don't need profits if they see some sort of growth like market share or expansion. But unfortunately AMD isn't doing great on any fronts. Amazon on the other hand if people like to use that example was pushing hard into new markets and reinvesting profits, and investors who read the reports could see this growth while profit was lacking.
 
Also, you don't have to post a profit to entice investors, yes Amazon is proof of this.

As long as you show continued growth from one year to the next, and or expansion into new potentially profitable markets, investors don't care if you post a profit or not. Significant growth based on cashflow alone is proof that you earned positive value. This will raise the stock price, which is almost as good as paying dividends.

AMD hasn't consistently improved their revenue, or attempted to enter new lucrative markets for around a decade..
 
defaultluser said:
AMD hasn't consistently improved their revenue, or attempted to enter new lucrative markets for around a decade..
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My fear is that they squandered too much of the settlement money. That should have been their ticket to aggressively enter new markets. I'm a fan of AMD but I can't shake the feeling that it wasn't used to extent it should have been.

I sincerely hope that time proves me wrong.
 
The only thing that can save them is a breakthrough product.
I have some confidence in AMD but the last product (Fury X) was a real let down. They finally got the sound profile/ HSF right but the card itself just was not enough.
Even when they do launch the better card (7970) they still get creamed because of all the forum and social media trolls Nvidia hires (I actually have proof of this now via a marketing company I do work on the side for).
Essentially the good they do gets drowned out in a sea of false complaints by people paid to complain.
 
PiSquared said:
My fear is that they squandered too much of the settlement money. That should have been their ticket to aggressively enter new markets. I'm a fan of AMD but I can't shake the feeling that it wasn't used to extent it should have been.

I sincerely hope that time proves me wrong.
Click to expand...

They were already too far behind at that point. The settlement money was a paltry sum compared to the damage Intel did with their business practices. It should have been at least an order of magnitude higher, if not more. Intel had them over a barrel tfinancially though, and they knew it. They knew they needed the money, so they made them an insulting settlement offer, and AMD was forced to take it.

Because of that, AMD was able to pursue one next gen CPU architecture, not two, so they focused on their server/enterprise arch, Bulldozer, and shoehorned it into a desktop part as well, but it was a poor fit.
 
Zarathustra[H];1041963015 said:
Yeah, but Amazon had magic fairy dust .com buzz allowing them to keep going back to the market for more funding.

AMD doesn't :p

I think profitability in 2016 is a very optimistic outlook, knowing - as we do - that their new CPU designs won't hit the market until very late in 2016 at best, that there will be inevitable costs to get them there, and it is unlikely one month of sales can put them in the black for the year.

GPU's might help though, depending on when HBM 2.0 models hit the market.

Still, I see 2017 as the first year in the black for AMD, IF they are successful with Zen and K12.

Disclaimer: I'm an Engineer, not a Financial Analyst.
Click to expand...

I have to agree with you entirely. I really do not see AMD turning any profit until a couple months after Zen and only if Zen is even worth it. So far with so many failed CPU launches my outlook on that is not very optimistic.
 
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