AMD duped by ATI?

[pfunkman]

Hmm... sounds like a lot of AMD f-a-nboys out here who seem completely blinded by the devestating financial issue AMD is in right now. They're in need of money, and ATi took quite a bit of that money away. Plus, I don't think AMD expected intel to gain back so much of the market so quickly. In a single quarter, AMD lost 600 million dollars and came in 300 million dollars less than intel in terms of revenue. Not to mention the price war which is going on right now. AMD really can't afford to do all of it and still survive. That, and some analysts also say that AMD needs about a billion dollars to catch up to Intel in terms of technology. I'm not saying I'm an expert on this, but it's pretty prevalent that AMD is in a screwed position now. A lot of people are saying they're in a worse position now than they were in 2001. They lost 6 - 8 percent of their marketshare in Q1. If you think AMD's going to easily bounce out of it, you're clearly blind.

Blah Blah Blah it dont work that way in the corporate world it is not uncommon for a company to sit in the hole on paper for many years during "restructuring", after corporate buyouts etc.

I just love how people come in here and act like they have the knowledge to run a corporation of this magnitude....

Fact is folks regardless of what you think dozens of highly skilled (And payed) Experts analyzed this decision and went over it with a fine tooth comb if these guys thought for a second that this could whipe AMD out it wouldve never taken place.

Ill say again for people to understand This is not a short term decision and thinking they will come out of debt in a matter of months is downright ignorant. With this deal in a few years they very well may be a larger company worth more money than either Nvidia or Intel without even dominating the market share in either area. All they would need is to be competitive in all areas be it motherboard chipsets, Video cards or processors and they will climb thier way out of debt with ease, it will be slow but it will be steady.

People are forgetting that they are now on multiple fronts and are no longer just a processor manufacturer. Just wait for ATI to get its shit together and start competing again and wait for the motherboard chipsets to start rolling out and just like that they wont even need majority market share in any area to thrive.

 

[Hvatum]

They aren't apt to call in the note quickly, creditors aren't stupid without the corporations, they don't make money too.

R&D and progressive manufacturing for long term goals are the last place where cuts will happen, so don't need to worry about this yet. First thing would be to down size middle management and redudent work forces in management and PR.

If the creditors become convinced that AMD is seriously troubled then they very well might demand immediate repayment. I'm sure they would structure it so as to maximize AMD's short term revenues, allowing AMD to complete whatever is currently in the R&D pipeline and put it out to market.

But creditors may very well decide that further R&D is simply a waste of cash without a future. So further development at AMD shuts down, instead they milk all of their current products for as much cash as possible, and drop anything which isn't profitable. This would only happen if AMD stops caring about long term share-holder value, and this isn't likely. So really the only way this would happen is if AMD shareholders no longer have a say, AKA. AMD becomes insolvent and creditors are calling all the shots. Very Unlikely!

This is a really terrible worst case scenario, which AMD is a long way from. At least come back in a few months and see what happens with the R600, a financially successful launch there would give AMD a nice bit of breathing room. And the card does not have to dominate in performance to be financially successful, the two are related but not the same.

 

[LawGiver]

looks like they knew the R600 would be crap, so they sold to AMD. lol.

 

[razor1]

If the creditors become convinced that AMD is seriously troubled then they very well might demand immediate repayment. I'm sure they would structure it so as to maximize AMD's short term revenues, allowing AMD to complete whatever is currently in the R&D pipeline and put it out to market.

But creditors may very well decide that further R&D is simply a waste of cash without a future. So further development at AMD shuts down, instead they milk all of their current products for as much cash as possible, and drop anything which isn't profitable. This would only happen if AMD stops caring about long term share-holder value, and this isn't likely. So really the only way this would happen is if AMD shareholders no longer have a say, AKA. AMD becomes insolvent and creditors are calling all the shots. Very Unlikely!

This is a really terrible worst case scenario, which AMD is a long way from. At least come back in a few months and see what happens with the R600, a financially successful launch there would give AMD a nice bit of breathing room. And the card does not have to dominate in performance to be financially successful, the two are related but not the same.

let me restate the OT's post again, yeah it does look like ATi scewed AMD

 

[Caffeinated]

let me restate the OT's post again, yeah it does look like ATi scewed AMD

 

[StealthyFish]

Blah Blah Blah it dont work that way in the corporate world it is not uncommon for a company to sit in the hole on paper for many years during "restructuring", after corporate buyouts etc.

I just love how people come in here and act like they have the knowledge to run a corporation of this magnitude....

Fact is folks regardless of what you think dozens of highly skilled (And payed) Experts analyzed this decision and went over it with a fine tooth comb if these guys thought for a second that this could whipe AMD out it wouldve never taken place.

Ill say again for people to understand This is not a short term decision and thinking they will come out of debt in a matter of months is downright ignorant. With this deal in a few years they very well may be a larger company worth more money than either Nvidia or Intel without even dominating the market share in either area. All they would need is to be competitive in all areas be it motherboard chipsets, Video cards or processors and they will climb thier way out of debt with ease, it will be slow but it will be steady.

People are forgetting that they are now on multiple fronts and are no longer just a processor manufacturer. Just wait for ATI to get its shit together and start competing again and wait for the motherboard chipsets to start rolling out and just like that they wont even need majority market share in any area to thrive.

You are no better qualified than us, thus you are being hypocritical in critiquing our take on this problem. Be quiet if you want to keep your point, you're no more an economic analyst than the rest of us, right? So stop acting condescending, as I don't see your name plastered to any paid economic report either.

 

[Manny Calavera]

QFHMFDSBBQT

BILLION dollar companies don't make BILLION dollar mistakes.

Enron ring a bell ??? Or do you live under a rock these days ?

 

[pfunkman]

You are no better qualified than us, thus you are being hypocritical in critiquing our take on this problem. Be quiet if you want to keep your point, you're no more an economic analyst than the rest of us, right? So stop acting condescending, as I don't see your name plastered to any paid economic report either.

I am not saying i know any better than you im simply saying the guys at AMD DO read my fucking post or STFU

 

[0ptional]

Enron ring a bell ??? Or do you live under a rock these days ?

PS3

 

[SharpieFiend]

Ah, all of the bedroom analysts come out... I think I hear your mother calling you for dinner!

 

[pfunkman]

Ah, all of the cool kids dont like me... I think I hear my mommy calling me for dinner!

Fixed

 

[Godofdestrcution]

All I can add to this is:

If your analyzing something without being completely neutral, IE, your an ATI *!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!, you shouldn't be arguing to begin with, because all you are basically doing is saying:

Mommy my favorite company is dying and I must protect them k thanx bye

Likewise, Intel *!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!*!s should STFU as well, as they'd be saying:

LOL ATI sucks and now it's getting owned LOL

 

[ManicOne]

let me restate the OT's post again, yeah it does look like ATi scewed AMD

Gotta disagree. If anyone screwed AMD, it was AMD. AMD analysts would have spent a long time looking at this merger, if they missed something or assumed wrong then that is their mistake.

 

[razor1]

well that was based on DT's benchmarks, if they are real, the r600 won't help AMD at all. And I'm sure they didn't tell AMD, the r600 is going to flop

 

[Caffeinated]

I don't think AMD is doomed, but I think R600 is - I guess we can wait some more and see if it materializes. We've gotten very good at waiting for it.

 

[seanmcd]

when two companies combine, there are often financial hardships in the beginning.
and after reading a handful of posts in this totally awesome thread - most of you should be locked away in a prison for super-nerds.

 

[pfunkman]

and after reading a handful of posts in this totally awesome thread - most of you should be locked away in a prison for super-nerds.

You know this is [H] right? The other places may have super nerds we have Super nerd ULTRA XXX editions

 

[Commander Suzdal]

You know this is [H] right? The other places may have super nerds we have Super nerd ULTRA XXX editions

You left out Red-Bull-cooled...

 

[razor1]

when two companies combine, there are often financial hardships in the beginning.

Not that simple, even if AMD was alone (with the ATi buyout), they will still be in a tough situtation, its because cash flow would still be the same as it now, they would have had more buffer since they would have a nice amount of cash to bank (and less debt) on but other then that not much change.

 

[arcturus]

(15 months later)

Advanced Micro Devices Inc. acknowledged Wednesday it overpaid in its $5.6 billion acquisition of graphics chip maker ATI Technologies Inc., adding to the deepening financial woes of the slumping semiconductor company.

http://money.cnn.com/2007/12/12/technology/amd_charge.ap/index.htm?source=yahoo_quote

"Now we know for a fact that AMD overpaid for ATI, they certainly did not do the due diligence required and did not understand the graphics market as it was at the time of the acquisition," said Raymond James & Associates analyst Hans Mosesmann.

http://www.reuters.com/article/marketsNews/idUKN1260337320071213?rpc=44

Crap, I was right.

Watch for further developments Thursday when they talk with 'analysts', no doubt the same ones who thought the acquisition was a good move
in the first place, lol.

I hear all those Ex ATI exec's continue to enjoy margaritas on their private yachts,
toasting their good fortune for the buttload of money AMD threw at 'em.

 

[Commander Suzdal]

(15 months later)

Advanced Micro Devices Inc. acknowledged Wednesday it overpaid in its $5.6 billion acquisition of graphics chip maker ATI Technologies Inc., adding to the deepening financial woes of the slumping semiconductor company.

http://money.cnn.com/2007/12/12/technology/amd_charge.ap/index.htm?source=yahoo_quote

"Now we know for a fact that AMD overpaid for ATI, they certainly did not do the due diligence required and did not understand the graphics market as it was at the time of the acquisition," said Raymond James & Associates analyst Hans Mosesmann.

http://www.reuters.com/article/marketsNews/idUKN1260337320071213?rpc=44

Crap, I was right.

Watch for further developments Thursday when they talk with 'analysts', no doubt the same ones who thought the acquisition was a good move
in the first place, lol.

I hear all those Ex ATI exec's continue to enjoy margaritas on their private yachts,
toasting their good fortune for the buttload of money AMD threw at 'em.

You called it all the way. I feel sorry for AMD, conceptually at least it was a great strategic move. At the time, the X1900 series was the best available and the market was reflecting that.

I wonder if the ATi management already knew that R600 was in trouble or if they just thought it was time to cash in while they were riding high? In either case, I'm sure they are enjoying their winter tans in some lovely spot or other. Assuming Canadians on permanent vacation can tan!

 

[Manny Calavera]

I said (back in the Winter/Spring) he was right in another thread.AMD would come to admit they overpaid and then some.I also said something about a 8 dollar share price in the fourth quarter.....

 

[Silus]

Edited, because I realized I was answering to a very old post....

 

[bangmal]

(15 months later)

Advanced Micro Devices Inc. acknowledged Wednesday it overpaid in its $5.6 billion acquisition of graphics chip maker ATI Technologies Inc., adding to the deepening financial woes of the slumping semiconductor company.

http://money.cnn.com/2007/12/12/technology/amd_charge.ap/index.htm?source=yahoo_quote

"Now we know for a fact that AMD overpaid for ATI, they certainly did not do the due diligence required and did not understand the graphics market as it was at the time of the acquisition," said Raymond James & Associates analyst Hans Mosesmann.

http://www.reuters.com/article/marketsNews/idUKN1260337320071213?rpc=44

Crap, I was right.

Watch for further developments Thursday when they talk with 'analysts', no doubt the same ones who thought the acquisition was a good move
in the first place, lol.

I hear all those Ex ATI exec's continue to enjoy margaritas on their private yachts,
toasting their good fortune for the buttload of money AMD threw at 'em.

You might need a better grade school math tutor and basic sense of business. The market cap of ATI was then 4.2 billion. In addition to xbox 360, each of the super popular nintendo Wii bears the logo of ATI. The two consoles which taking up 80% of the console market. Its public image was only to get better and market cap was to grow.

It looks like AMD is just finding something to blame. AMD brought this to itself by hyping the k10 and ending up throwing out some buggy crap. In fact, the only worthy things from AMD at the moment are the ATI 3800 series.

 

[eric66]

why did ati even merge with this loosers why not intel ? i really wonder

 

[Commander Suzdal]

You might need a better grade school math tutor and basic sense of business. The market cap of ATI was then 4.2 billion. In addition to xbox 360, each of the super popular nintendo Wii bears the logo of ATI. The two consoles which taking up 80% of the console market. Its public image was only to get better and market cap was to grow.

It looks like AMD is just finding something to blame. AMD brought this to itself by hyping the k10 and ending up throwing out some buggy crap. In fact, the only worthy things from AMD at the moment are the ATI 3800 series.

You might want to review your grade school reading skills and actually study the articles linked above, as well as the rest of this thread. This issue is entirely and only about ATi--how their product line and market share has tanked over the last year, and how their future prospects were overestimated by AMD. While the overestimation may be AMD's responsibility (ultimately, even though the actual analysis was done by highly paid "experts" who supposedly knew what they were doing), the failure to execute on an engineering level with R600 and the continued failure to produce a competitive high-end part lies with ATi.

AMD has similar problems with its CPUs, yes, but that is a separate issue. R600 was supposed to own, it failed, and now AMD is left holding the bag. If ATi's market position in consoles made a real difference in the overall financials, then we would not be reading these stories, so your other points obviously have already failed to pan out. My guess is that the reason for the console GPUs' lack of impact is that 1) most of those sales were already booked as revenue a long time ago, and 2) the margins on those parts are very thin.

A fanboy and his money are soon parted. I'd stay away from the stock market if I were you.

 

[aFive]

When I was building a new rig, right after 2900XT came out, I was seriously considering the card. On paper it looked awesome, 1gb of ram, GDDR4....
Well, performance wise, it was close to the 8800GTX in the game that were out then. Now, we see it plummet even deepter. If I have went with HD2900XT back then, I would really be angry at AMD right now.

They did overestimate, they need nothing less than amiracle in q1 2008 to get some of their fans back. The way it is looking right now, my next card with not be red.

 

[sl3000gt94]

i dont think they paid too much, ati is a great company!! i bet because of there experience with xbox360, there next generation dx10 cards will be real good. they've already have a bit of experience with it(dx10), because the 360 is based on it.

Wrong
"according to ATI themselves. "Xbox360 cannot run DX10, and confirmed what I said earlier about the extended functionality. "

it uses a modified dx9

 

[aFive]

Wrong
"according to ATI themselves. "Xbox360 cannot run DX10, and confirmed what I said earlier about the extended functionality. "

it uses a modified dx9

That's a shame. ATI was awesome 2-3 years back. Sad that things went this way. I wasn't even concidering the green card for a long time .

 

[Menelmarar]

why did ati even merge with this loosers why not intel ? i really wonder

That would imply Intel actually would want ATI. Intel is a much larger graphics GPU company than either ATI or nVidia. They have their own DX9 and DX10 GPU's.

Granted not enthusiasts levels, their target market is low power, integrated for mainstream high volume desktops and laptops. Profits+++

*IF* they ever want to, and they might with the rumors of Larrabee, Intel just needs to take their current GPU, already with DX10 shaders, move it to an addon PCI-e card, ramp up the parrallelism, clock speed, etc. Only they know what their architecture is capable of when scaled up. Anything else is speculation.

 

[Spare-Flair]

Does ATI get production revenue for the Wii and Xbox 360 chips? Or only royalties? What kind of business does that net them considering how well those systems are selling?

People often forget the console market and think ATI makes nothing but videocards.

 

[Menelmarar]

People often forget the console market and think ATI makes nothing but videocards.

...but those things you mentioned that's what ATI did, was *design* the "videocards" for them.

"Videocards" or more accurately GPU's are their main business whether they are put on PCIe videocards, in consoles, in cellphones, in your TV, still GPU's of some flavor that they designed and most likely had TSMC or UMC make.

 

[quadnad]

Does ATI get production revenue for the Wii and Xbox 360 chips? Or only royalties? What kind of business does that net them considering how well those systems are selling?

People often forget the console market and think ATI makes nothing but videocards.

ATi sells a product to Nintendo and Microsoft. Thats how the system works.

 

[evolucion8]

i dont think they paid too much, ati is a great company!! i bet because of there experience with xbox360, there next generation dx10 cards will be real good. they've already have a bit of experience with it(dx10), because the 360 is based on it.

Xbox360 chip is DX9, it has a lot of DX10 features but it's pipeline still DX9, call it like an hybrid, after all it supports SM3.5 AFAIK

 

[evolucion8]

That's a shame. ATI was awesome 2-3 years back. Sad that things went this way. I wasn't even concidering the green card for a long time .

I don't understand why you people base their opinions on the high performance market or it's high end performance, it's clear that nVidia is ahead in the high end, but that's a niche market, where the real money is, it's in the chipset market and the mainstream and budget cards, Have you seen lately lots of integrated or low end ATi cards on many OEM PC's? Or in laptops? That explains also why the HD 3870 is hard to find, and is not because of Production Issues, is cause it's affordable and the performance is astonishing, surely is behind of the 8800GT, but also it cost more.

 

[Caffeinated]

It could be that they made a bet that all of the strident ATI fans would naturally become AMD fans as well... forgetting that many of the AMD fans were also NVIDIA fans and dropped both AMD and ATI like hot rocks.

It could also be that it has nothing to do with either, and it is just more evidence that Hector Ruiz has made some horrendous mistakes and intends to loot the company on his way out.

 

[quadnad]

I don't understand why you people base their opinions on the high performance market or it's high end performance, it's clear that nVidia is ahead in the high end, but that's a niche market, where the real money is, it's in the chipset market and the mainstream and budget cards, Have you seen lately lots of integrated or low end ATi cards on many OEM PC's? Or in laptops? That explains also why the HD 3870 is hard to find, and is not because of Production Issues, is cause it's affordable and the performance is astonishing, surely is behind of the 8800GT, but also it cost more.

Hang on: the post you quoted represents the opinion of an enthusiast. In other words, someone who cares about the high-end (just as everyone else here on [H]). ATi has left nVidia unchallenged in the high end, and this undoubtedly makes many ATi and nVidia fans sad. ATi fans want a performance crown, or at the very least a performance card to challenge nVidia, meanwhile nVidia fans want some competition to spur nVidia into their next generation. Nobody is talking about whether nVidia or ATi are doing a better job with the mainstream segment.

Also, the 3870 doesn't have "astonishing" performance, and it's a mere $20 cheaper on Newegg as compared to the cheapest eVGA 8800GT. I'd take another look at the review of the 3870 that [H] did and then reconsider whether the difference of $20 would really change your decision.

 

[evolucion8]

Oh pliz, are you gonna believe the Hardware review of only 1 site which it has twice the nVidia base fan than it's direct competitor ATi, do a research to many different websites and calculate the average. Is true that ATi doesn't have any High End card currently (Until the R680 or whatever it is) but the bad is that it leaves little choices for the very small niche market called enthusiasts, which makes companies like nVidia to stuck their high prices and lack of innovation, I remember when the battle was a close call, that both would release architectures and releases more often, now we just have a GeForce 8 which more than a year old with an aging architecture.

 

[quadnad]

Oh pliz, are you gonna believe the Hardware review of only 1 site which it has twice the nVidia base fan than it's direct competitor ATi, do a research to many different websites and calculate the average. Is true that ATi doesn't have any High End card currently (Until the R680 or whatever it is) but the bad is that it leaves little choices for the very small niche market called enthusiasts, which makes companies like nVidia to stuck their high prices and lack of innovation, I remember when the battle was a close call, that both would release architectures and releases more often, now we just have a GeForce 8 which more than a year old with an aging architecture.

I'm not going to argue about the performance of the 3870 simply because the reviews available on different websites back up the [H] numbers. Also, calling [H] biased isn't a smart thing to do when they lay out their entire testing methodology and give you the graphical representation of performance over time per card. All I'm saying is the that 3870 doesn't exhibit "astonishing" performance, and is a mere $20 cheaper than the 8800GT. So unless you're on a truly (and in my opinion unreasonably) strict budget, the 8800GT seems to be the better choice.

Of course the lack of competition allows nVidia to sit back and relax, but whose fault is that? If ATi produced something reasonable (instead of R600), we more than likely would have seen another high-end card before Christmas (as nVidia had mentioned in a conference call, their 1 TFlop beast). In any event, although the 8800 has been out for about fourteen months now, it can still run every single game available maxed at very high resolutions, barring Crysis. I wouldn't really call that an aging card (in the sense that it doesn't perform very well), but hopefully the release of nVidia's GX2 and ATi's R680 will restore a certain level of competition.

In my opinion, the earliest we'll see competition in the videocard market restored is with the release of R700 (and thats assuming R700 is any good).

 

[Commander Suzdal]

Not to mention the laughable "statistic" he pulls from his posterior that [H] has "twice the nVidia fan base as ATi." Even if that is remotely true (I don't remember seeing a counter anywhere or a spot on the user profile to register your GPU preference), it would only be so since the release of the G80, which demonstrates a bias in favor of the best available hardware, not in favor of nVidia. Prior to that, the red legions who championed the X1900 series (and rightly so) were very high-profile.