AMD - Bankruptcy Or A Turnaround?

[HardOCP News]

Anyone that has read our recent editorials knows what this article is saying is right on the money. Speaking of money, AMD has been in financial trouble for some time and, unless the company turns things around, bankruptcy is a very real possibility. For everyone's sake, let's keep our fingers crossed that AMD does eventually turn things around.

Advanced Micro Devices (NASDAQ: AMD) has been a financially distressed firm over the recent years and discussions about its future have often resulted in heated debates. While some believe the chipmaker is making the right moves to stage a successful turnaround, others are convinced that its bankruptcy is imminent going forward.

 

[ManofGod]

Well, I hope they turn it around because I simply prefer AMD hardware to all others.

 

[doz]

Stock is on a roller coaster. With this new overpriced outdated card released, I see them tanking for a bit. Hopefully, they tank well all in time for Zen.

 

[pxc]

It's so strange that articles keep bringing up the end of the 2011 GPU patent licensing deal with Nvidia, as if it will somehow benefit AMD. Several articles completely misunderstand the nature of the agreement. The terms of that patent licensing deal are that Intel gets a license in perpetuity (forever) to use patents licensed from Nvidia during the agreement period. Some articles misinterpret this as Nvidia designing GPUs for Intel or Intel buying Nvidia's GPUs. It's not either. It's a protection against claims of patent infringement (developed independently, but coincidentally using patented ideas) and/or licensing an implementation method. The day after the agreement with Nvidia expires, nothing changes. All of Intel's iGPUs, released and currently in development, continue to work and don't need a another license. The evolution Intel has been doing on the same basic GPU design for years doesn't require anything special at this point. If in some case where graphics changes radically, Intel could choose to renew or make a new agreement in order to access a company's future tech. Right now, that's not necessary.

tl;dr the ridiculous fantasy of Intel giving hundreds of millions a year to AMD for GPU licensing is simply ridiculous fantasy, perpetrated by people who don't understand the Intel-Nvidia agreement.

 

[NeghVar]

So if AMD goes under, what would that mean for Intel and Nvidia now that they would have a monopoly? Could they now treat us like ISPs treat us without concern about losses to a competitor. Oh wait...there are no competitors.

 

[Stoly]

So if AMD goes under, what would that mean for Intel and Nvidia now that they would have a monopoly? Could they now treat us like ISPs treat us without concern about losses to a competitor. Oh wait...there are no competitors.

Well No, because now there's ARM

 

[pcgeekesq]

For those who didn't want to register, you can just up the page number in the hyperlink and use Ctrl-A to get rid of the blurring.
Here's the TL;DR from page 4:

Putting it all together

The estimated improvement in AMD's Z score attached above essentially suggests that the company isn't heading towards bankruptcy. It's financial stress levels are estimated to reduce going forward so that should encourage a higher participation from lenders, investors and rating agencies. However, the above model is based on the assumption that new launches are good and they generate sizable incremental revenue for the company going forward. If its new product launches don't pan out as expected, the above model fails and AMD could end up in big trouble.​

 

[Axehandler]

Stock is on a roller coaster. With this new overpriced outdated card released, I see them tanking for a bit. Hopefully, they tank well all in time for Zen.

I'm not sure what stock your looking at...
in the last year AMD has doubled their stocks

 

[DrLobotomy]

So if AMD goes under, what would that mean for Intel and Nvidia now that they would have a monopoly? Could they now treat us like ISPs treat us without concern about losses to a competitor. Oh wait...there are no competitors.

My theory is that even if they go 'under', someone will buy up their IP and carry on with a better plan.

I don't know about a magic deal with Intel for GPU tech, but I WAS under the impression that Intel licensed tech from AMD for their 64 bit cpu's.

 

[andrewaggb]

It sucks if they go under, no more driver updates. With no competitors other than nvidia it becomes a monopoly. Also sucks for game consoles because it means backwards compatibility will again be a big deal.....

 

[tetris42]

So if AMD goes under, what would that mean for Intel and Nvidia now that they would have a monopoly? Could they now treat us like ISPs treat us without concern about losses to a competitor. Oh wait...there are no competitors.

Yeah, pretty much.

Well No, because now there's ARM

Oh yeah, ARM is killing it in high performance and gaming. I better make my next system an ARM one so I can run the newest games.

My theory is that even if they go 'under', someone will buy up their IP and carry on with a better plan.

Maybe, though my guess is the companies would just absorb the technology and maybe use some of it rather than launch actual competition. Or hey, Nvidia or Intel could be the buyers!

 

[Cr4ckm0nk3y]

I don't see a full sell off bankruptcy happening, especially with AMD's past and future.

Restructuring maybe but selling off the entire company, no. Some one out there will refi their debt and we will have the same conversation in 6-10 years.

Su was a horrible choice as CEO and she needs to get pushed back into engineering and out of the leadership role. That will save AMD.

My theory is that even if they go 'under', someone will buy up their IP and carry on with a better plan.

I don't know about a magic deal with Intel for GPU tech, but I WAS under the impression that Intel licensed tech from AMD for their 64 bit cpu's.

Problem is the cross license from Intel for x86 doesn't transfer if an entity acquires 51% or managing control of AMD. Intel has a right to pull out and keep AMD x64 tech.

For AMD to keep x86 they can't be bought out without Intel's blessing. Influx of capital maybe but AMD needs to remain AMD.

 

[MavericK]

Well, I hope they turn it around because I simply prefer AMD hardware to all others.

...Why? Because of the name? It's certainly not the performance or competitiveness of the products in the marketplace...

I don't want to see AMD fail, either, but it's because I don't want low-end Intel processors skyrocketing to $500+.

 

[Pieter3dnow]

I don't see a full sell off bankruptcy happening, especially with AMD's past and future.
Restructuring maybe but selling off the entire company, no. Some one out there will refi their debt and we will have the same conversation in 6-10 years.
Su was a horrible choice as CEO and she needs to get pushed back into engineering and out of the leadership role. That will save AMD.

There are not many capable of being a CEO where you need to keep things going and when you flinch you get punished your competitors are brutal they control most of the market and when you have decent products you get screwed by tactics as contra revenue funds.

You can replace Su but with whom ? You need to be realistic about this because it can be game over for AMD ...

 

[lcpiper]

So if AMD goes under, what would that mean for Intel and Nvidia now that they would have a monopoly? Could they now treat us like ISPs treat us without concern about losses to a competitor. Oh wait...there are no competitors.

What happens when tech companies go under?

If they owned anything of real value, products that were competitive, patents, etc. Somebody buys them up.

Look, if AMD tanks, someone is going to buy what AMD owns, and they'll use it, or some of it.

Maybe they'll try to compete in the same market space and maybe not. But I don't think AMD operates in a business space that is impossible to compete in. AMD has had too long of a run. I think AMD has problems with the business of competing and it's killing them.

Somebody else might do better. Somebody else may not want to start from scratch and pay other's for their patents and IP. Someone else may just be waiting to see if an opportunity to expand their current markets presents itself.

And I don't know who this somebody might be .... just somebody.

 

[SixFootDuo]

Personally, after years of dealing with driver issues, lower performance against nVidia, one disappointment after another, I am more than O-K to see them sold off. I want this more than anything for their fans. Would love to see their legacy survive and carried on by more capable people. AMD could be great again if they had more money and engineers moving forward. Not that I pretend to know a lot about AMD but to me it they seem slow and meandering and sadly, slowly slowly falling behind with less innovation and performance.

 

[Ur_Mom]

I loved AMD throughout the years. But, I've never been loyal. If Intel had something better, I'd go for Intel. If NVIDIA had something better... well, I stayed with AMD through that. I think I've been with AMD/ATI since the 9700Pro days.

I'm hoping for a nice turn around. They don't have to be the leader in performance. But, give a nice price/performance ratio. Right now, I could easily go for a decent Intel build and it wouldn't be that much more expensive than a comparable AMD build. I really like AMD as a brand and a company. They were/are the underdog. They just don't compete that well anymore. I like competition for the lower prices and more push for better technology, but I also like what they have brought to the table in the past (Athlon 64, K6-2, etc.).

 

[lcpiper]

I'm not sure what stock your looking at...
in the last year AMD has doubled their stocks

View attachment 4742

Back around 2003 I bought $10k in AMD stock at just under $10 a share.

They dropped to $5, then to under $3.

Then after about two years AMD crawled back up to $10 a share and I was so revealed to cash out, call it a wash, and put my $10K somewhere else.

And AMD went to $15 and all the way to $50 a share.


I cried


Just thought I would pass on a little history regarding AMD's stock value.

If I remember I think those were the Athelon / Opteron years.

 

[Private_Ops]

Problem is the cross license from Intel for x86 doesn't transfer is an entity that acquires 51% or managing control of AMD. Intel has a right to pull out and keep AMD x64 tech.

For AMD to keep x86 they can't be bought out without Intel's blessing. Influx of capital maybe but AMD needs to remain AMD.

I don't think most people really understand this.

 

[lcpiper]

I don't think most people really understand this.

And what happens when the tech becomes 128bit?

I'm just looking forward here.

 

[swetmore]

Well if AMD was carved into pieces and the best parts distributed, it would be really nice if somehow Nvidia got into the CPU market.

 

[Nytegard]

While someone would certainly buy the technology should AMD go under, gamers will be hurt. And even if AMD disappeared tomorrow, it still wouldn't be a monopoly. There are tons of CPU makers and GPU makers in the world. It's just that for serious gaming, we'd have NVidia, and that's it (sorry Intel fans, their GPUs aren't really gaming GPUs). It would lead to the NVidia 1180 barely being any faster than the 1080, or at least a faster card not coming out for quite awhile. It was AMD who got gamers past the 1 GHz mark, and forced Intel into speeding up their development of better processors.

As for the stock, it's great right now if you bought in within the past few years when it was under $2.50/share. But as with all things stock market related, the share value is not always straightforward of why it is what it is.

 

[Cr4ckm0nk3y]

You can replace Su but with whom ? You need to be realistic about this because it can be game over for AMD ...

That is the billion dollar question. Unfortunately most of the great figure heads in tech are either taken or retiring. AMD should possibly look towards applicants from another industry.

Su is an engineer with the personality of an engineer, no offense to my engineer friends. This is not to say engineers can't make terrific CEO's. Many are! It more points to the reason why Su does not appear to be engaging, pleasant or comfortable on stage.

CEO's need a certain swagger that says give us money and we will turn it to gold. That is what AMD needs. Great engineers behind the scenes and someone that can get them capital/sell their products. Where does AMD get this? Shit if I know but their last few choices have been terrible. Hopefully the change in the board will also allow them to find new leadership. If anything find people that can help Su become a better CEO because every time she interrupts Raja or lets Huddy open his damn mouth I just think, I won't buy anymore stock from this company.

 

[Imhotep]

Whoever this person that wrote this article is ...... he/ she must be on some funny coolaid. Such is the internet I guess these days. Some of the crap that you guys wrote about AMD lately is pretty funny as well. Alcohol is not your friend.

 

[ManofGod]

...Why? Because of the name? It's certainly not the performance or competitiveness of the products in the marketplace...

I don't want to see AMD fail, either, but it's because I don't want low-end Intel processors skyrocketing to $500+.

The AMD products actually perform quite well, I am not sure where you get you information. Also, why do I care if it competes against a 6700k when there is little day to day difference with that except that it cost significantly more. (No, dual cores are not viable for me.) I game at 4k most of the time which means there is almost no difference at those resolutions.

 

[heatlesssun]

I don't think most people really understand this.

Yeah, I thinking this provision is in place to prevent say someone like Apple buying up AMD and then becoming a direct competitor to Intel using Intel's own tech against them.

 

[rigurat]

Back around 2003 I bought $10k in AMD stock at just under $10 a share.

They dropped to $5, then to under $3.

Then after about two years AMD crawled back up to $10 a share and I was so revealed to cash out, call it a wash, and put my $10K somewhere else.

And AMD went to $15 and all the way to $50 a share.


I cried


Just thought I would pass on a little history regarding AMD's stock value.

If I remember I think those were the Athelon / Opteron years.

I remember it being around mid 2000 when AMD stock prices were sky high. Back then, AMD was the go to processor for almost every enthusiast and system builder.

 

[Trimlock]

Yeah, I thinking this provision is in place to prevent say someone like Apple buying up AMD and then becoming a direct competitor to Intel using Intel's own tech against them.

I always thought it was an imposed agreement that Intel would share its x86 license to prevent them from preventing CPU competitors due to software limitations.

 

[daglesj]

Thing is AMD was smart to tie itself into three big layers for the consoles.

They might not make much money from it but if three big players can expect to lose a lot through you going under then chances are they wont allow that. Sometimes it not all about making deals that bring in lots of money, it's about chaining yourself to a bigger beast.

 

[quiktake2009]

Doesn't Intel still owe AMD over a billion dollars due to the Antitrust agreement? I think AMD will be around at least another 10 years.

I think a worst case scenario is a buyout from a larger tech company or an investment from the Chinese.

 

[Ryokurin]

...Why? Because of the name? It's certainly not the performance or competitiveness of the products in the marketplace...

I don't want to see AMD fail, either, but it's because I don't want low-end Intel processors skyrocketing to $500+.

It wouldn't be in Intel's best interest to raise prices if AMD went away. PC sales are dropping as it is as most machines even five years old are still adequate for most people. If low end machines went back up to $500+ most people would just buy ARM and be happy. If anything I can see Intel seriously slowing down processor development. That may still happen even with AMD around, but wouldn't be as quick as it would be without them.

 

[exlink]

Declare bankruptcy, sell Radeon Technologies Group to Intel and put 100% of AMD's focus on developing better CPUs/APUs only. Everyone wins.

 

[tetris42]

It wouldn't be in Intel's best interest to raise prices if AMD went away. PC sales are dropping as it is as most machines even five years old are still adequate for most people. If low end machines went back up to $500+ most people would just buy ARM and be happy. If anything I can see Intel seriously slowing down processor development. That may still happen even with AMD around, but wouldn't be as quick as it would be without them.

Or if they wanted to go for maximum squeezing, they keep low end prices where they are, but jack up every i7 out there to 90s CPU prices.

 

[Riccochet]

They're not going bankrupt any time soon with the way their stock is performing. If they can keep the pace, get some solid investment money, drop a decent CPU/APU sometime and hope to god Vega performs they won't be going anywhere.

I'm just kicking myself in the ass for selling when I did. I bought in January when it was $1.83 and sold at $2.79 thinking it was going to tank before Polaris hit. Now I'm contemplating buying back in at $5.00 hoping it goes up to $10-15 in the next year. Which is a real possibility.

 

[Nytegard]

I'm just kicking myself in the ass for selling when I did. I bought in January when it was $1.83 and sold at $2.79 thinking it was going to tank before Polaris hit. Now I'm contemplating buying back in at $5.00 hoping it goes up to $10-15 in the next year. Which is a real possibility.

That's just part of the market. AMD had always gone down after quarterly earnings for the past few years, and was expecting the same. And I was constantly telling everyone it was going to hit at least $3.50 before years end, and yet I still sold based on prior performance. I was expecting it to go down and repurchase at a lower price, and I was wrong. Still, you made a 50% return which is nothing to sneeze at. Unless you're committing insider trading, the market is always going to be some form of a gamble.

 

[Deleted member 184142]

So if AMD goes under, what would that mean for Intel and Nvidia now that they would have a monopoly? Could they now treat us like ISPs treat us without concern about losses to a competitor. Oh wait...there are no competitors.

ISPs have a monopoly in many cases because of regulator capture and government enforcement through ROW restrictions and taxes. Intel for the most part has gotten where it is without these sorts of government interventions, rather the lack of AMD to be able to keep a competitive market share, along with some very, very poor financial choices. Intel has to compete with it self, new products have to compete with old, because over all life time of CPUs is long....Very very long, mobos and HDDs often kicking the bucket years if not decades before a CPU will. If they were to start charging more than market price for CPUs, someone else will enter the market because it would be financially profitable for them to do so. Lets also not forget Intel has already not had much competition for some time now from AMD, yet prices have still been falling for the processing power you can get for the money. What an uber highend PC costs today is what many of us were paying for just a basic PC and that's not accounting for inflation, which in some cases would make that 2x the cost of what a highend rig costs today.

A mid to upper range Intel CPU back in 2004-2005? over $500 (todays money). Today however you can get an i7 6700k for under $300, not only cheaper (almost half the price), but many fold better in every single way. People forget that no other market has had these sorts of improvements and price drops, all people think is "I want a 48 core CPU that clocks to 10Ghz for under $200, and if you don't, you are over charging."

 

[Zarathustra[H]]

As I understand it, the real danger has to do with AMD's cash on hand, and their bonds coming mature.

What is it, about a billion in bonds maturing in December 2017, another 1.5 billion in March 2019, and another billion in august 2020? Yeah, something like that...

They certainly don't have the cash on hand to pay them off outright, and their recent downgrade to CCC credit rating means its going to be difficult and more expensive to raise bonds to replace them.

At the very least once these bonds mature, the replacement bonds are going to have MUCH higher coupon payments associated with them (equivalent to interest) than before, exacerbating their situation.

I certainly hope they succeed, because as horrible as the market is now with low competition, it will be even worse with no competition.

Zen is really looking more and more like their final Hail Mary pass. Zen can't afford to be a disappointment. It has to come out of the gate doing well and turning a profit. Maybe that can help increase their CCC credit rating to something higher, and make it more likely they can issue new bonds at better rates to replace the ones that are maturing.

If the worst happens, and they do file for chapter 11, I wonder what would happen. Would they be able to restructure? Liquidate? I'd like to think that at least the Radeon Technology Group has some value for someone else to snap up, so there will probably still be competition on the GPU side. On the CPU side it becomes less clear, as anyone who would try to acquire them would have to renegotiate the x86 license with Intel, and who knows how that would go. We'd likely see AMD's ARM technology live on, but we don't exactly care about their ARM technology

Regardless of what happens, I doubt the AMD name and technology would completely disappear. How it would turn out - however - is anyone's best guess at this point.

 

[Zarathustra[H]]

Problem is the cross license from Intel for x86 doesn't transfer if an entity acquires 51% or managing control of AMD. Intel has a right to pull out and keep AMD x64 tech.

For AMD to keep x86 they can't be bought out without Intel's blessing. Influx of capital maybe but AMD needs to remain AMD.

Yeah, I can't help but wonder what on earth made AMD sign such an awful deal.

Hey Intel you get full perpetual rights to our x64 tech, and in exchange you get to hold us over a barrel for all eternity...

 

[Cr4ckm0nk3y]

Yeah, I can't help but wonder what on earth made AMD sign such an awful deal.

Hey Intel you get full perpetual rights to our x64 tech, and in exchange you get to hold us over a barrel for all eternity...

AMD really had no choice. If they wanted to get x64 out AMD would have to keep x86 licenses. Intel has all the power when it comes to the dealings.

 

[Zarathustra[H]]

AMD really had no choice. If they wanted to get x64 out AMD would have to keep x86 licenses. Intel has all the power when it comes to the dealings.

Yeah, it's really annoying. Most of us see x86 as a market - granted a market that Intel created - in which Intel is one of the players, along with AMD and - historically - Cyrix and NEC.

Intel - however - sees CPU's as a market, and they see x86 as their entrant into that market.

A read on the legal history of Intel CPU's makes this abundantly clear. (I found this read rather interesting back when I first stumbled across it)