AMD quits

fightingfi

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Historically, AMD has surprised analysts and investors with a better than expected quarter result in 20 of the past 48 earnings calls. Today's was not one of those calls, but there was still a surprise.

ZoomThe plain numbers of AMD's Q3 result look dramatic. Revenue of $1.27 billion was down 10 percent sequentially and 25 percent year over year. The net loss was $157 million compared to a net profit of $97 million in Q3 2011. Rory Read, who has been CEO of AMD since August 2011, released the following statement as comment:

"The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD. It is clear that the trends we knew would re-shape the industry are happening at a much faster pace than we anticipated. As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model. Our restructuring efforts are designed to simplify our product development cycles, reduce our breakeven point and enable us to fund differentiated product roadmaps and strategic breakaway opportunities."

Lowering the cost of the business model has, of course, to do with layoffs. Subjectively, AMD has been in restructuring since the time Read joined the company. About 1,400 people were laid off beginning in November of last year and there has been an ongoing replacement program for people who left AMD over the past year, shaking up AMD's on-hand talent in virtually all business fields. About a year ago, AMD employed a head count of 11,737 at the end of June. This restructuring round will bring the head count down 15 percent to just under 10,000 people. AMD expects to save about $190 million per year as a result.

Read explained during the earnings call that the entire cost reduction approach is targeted to help AMD achieve a lower breakeven point at $1.3 billion revenue per quarter. He expects the company to achieve this revenue base by Q3 2013, which means that there will be four more quarters of expected losses for AMD - which is not necessarily a safe game, given AMD's deteriorating cash. The company has $1.3 billion available, down from $1.58 billion three months ago. If the gets even worse, AMD could be in serious trouble.

However, Read said that he understands what the problem is and there is a strategy in place to fix it. While the company was able to gain some market share in mainstream notebooks, according to the executive, lower end PC sales are very weak at this time, while tablet sales are growing quickly. He also echoed Intel's note that vendors are taking a cautious approach toward the launch of Windows 8. Both AMD and Intel are not exactly enthusiastic about the Windows 8 launch opportunity, which will most certainly increase the concerns over Windows 8's ability to relight the fire of the PC market.

Reads idea is to be less vulnerable to those problems, especially because he does not believe that the PC market will return to normal growth for "several quarters". As a result, he is not only reducing AMD's cost, he is also moving away from the PC market as a whole. "40 to 50 percent" of AMD's future business will not be focused on PCs. Instead, he will aim half of AMD's business three areas: At servers, which will leverage AMD's own CPUs, "third-party" CPUs, and will count on SeaMicro's server fabric to provide custom solutions. Another area will be "semi-custom" APUs for the gaming, industrial and communications market and AMD will be aiming its APUs at ultramobile devices. Despite the reduced headcount, Read believes this is possible by reusing its technology across more platforms and by simplifying product development cycles.

Will it work? Your guess is as good as any, but Read says that his recipe will work by Q3 2013. So, he has given himself and the new AMD about a year. If it does not work, AMD will have run out of money and confidence - and potentially beyond repair.
 
Well written troll post,gratz on that,but I did not see any hint of quitting,only restructuring as rory was quoted saying through the entire post.
 
pretty sure OP meant they quit in the high end cpu market which intel currently dominates... article's just saying intel we give up the cpu performance crown and we'll concentrate on getting to greener pastures...
 
pretty sure OP meant they quit in the high end cpu market which intel currently dominates... article's just saying intel we give up the cpu performance crown and we'll concentrate on getting to greener pastures...

Which is old news if the OP meant it that way.
 
pretty sure OP meant they quit in the high end cpu market which intel currently dominates... article's just saying intel we give up the cpu performance crown and we'll concentrate on getting to greener pastures...

If that's what he meant that is what he should of said. The trolling in AMD threads gets old.
 
Also focusing on server market has always made sense. That is where the money is.

And it's a market that AMD has been losing for years now.

AMD stole over 20% market share from Intel while they were fucking around with the Pentium 4 disaster, and they've been losing it ever since the release of Conroe. Nehalem with high-scaling QPI interconnect was the last nail in the coffin - AMD's server share has been in freefall since then.

2010: 7% server market share!

This year: 5.5% server market share

There's no way in hell AMD can reverse this trend with their existing silicon - that's already been made clear. But going third-party (ARM) may also be a bad idea, as they become just one of the many in a sea of ARM server dealers. They don't have the time or money to invest in a new chip architecture, so they're probably just going to slowly rot.
 
pretty sure OP meant they quit in the high end cpu market which intel currently dominates... article's just saying intel we give up the cpu performance crown and we'll concentrate on getting to greener pastures...

Par for the course. AMD only ever ended up with the performance crown once (counting all Athlons as one victory) through some smart buyouts and hiring a lot of talented engineers who came from DEC. The basis of the original Athlon was not entirely AMD's, but it took them in a direction which allowed them to milk the technology for years with improvements to it. Intel also underestimated them given their past history. They also bet on the wrong horse as it were with Netburst. Both things coincided which led AMD to a performance victory for that period of time from the Athlon to the Athlon X2.

However the Athlon wasn't always a total victory. Subsequent Athlon's based on Thunderbird and beyond were definitely more of a victory than even the original Athlon was. And even then until the nForce chipsets came out the Athlon's motherboard's and chipsets were basically almost always trash. So even then AMD wasn't always a clearly better choice.
 
Par for the course. AMD only ever ended up with the performance crown once (counting all Athlons as one victory) through some smart buyouts and hiring a lot of talented engineers who came from DEC. The basis of the original Athlon was not entirely AMD's, but it took them in a direction which allowed them to milk the technology for years with improvements to it. Intel also underestimated them given their past history. They also bet on the wrong horse as it were with Netburst. Both things coincided which led AMD to a performance victory for that period of time from the Athlon to the Athlon X2.

However the Athlon wasn't always a total victory. Subsequent Athlon's based on Thunderbird and beyond were definitely more of a victory than even the original Athlon was. And even then until the nForce chipsets came out the Athlon's motherboard's and chipsets were basically almost always trash. So even then AMD wasn't always a clearly better choice.

Yeah, I build a few Athlon's around VIA and SIS chipsets and wasn't terribly impressed. The nForce 2 however was pretty awesome. Dual channel memory controller and locked PCI/AGP bus made it a dream for over-clockers. Probably my favorite chipset of all time.
 
I really don't care for all the doom and gloom and not sure if the CPU forum is something which should be abused for spreading it, move it to a general forum as this article from another website does very little to cpu since AMD does so much more, GPU are featured in all (?) upcoming consoles.
 
Restructuring in a way that is moving away from the desktop market more, which is a market that has been shrinking quite a bit, is only logical. APUs are the logical next step, since laptops and tablets are taking over, and the server market has always been where the real money is. This is hardly 'quitting'.
 
TIL fightingfi knows how to make a sensational headline and doesn't understand business.
 
According to AMD's 2012 3rd quarter earning report.

CPU has lost of $114 million
GPU has profit of 18 million

with long term debt at $2,000 million and cash reserve at $776 million.

In short term, AMD is not in big trouble, since it has $683 million of Accounts Receivable. It can collect or sell these receivable to get more cash.

In long term, without increasing in revenue, I can't see AMD has the ability to pay off the debt.

Acquisition of ATI was a huge mistakes. It didn't generate extra revenue as expected. Based on the financial informations I have collected in past few years, AMD is killed by the interest payment for the loan that was used to acquire ATI.
 
According to AMD's 2012 3rd quarter earning report.

CPU has lost of $114 million
GPU has profit of 18 million

with long term debt at $2,000 million and cash reserve at $776 million.

In short term, AMD is not in big trouble, since it has $683 million of Accounts Receivable. It can collect or sell these receivable to get more cash.

In long term, without increasing in revenue, I can't see AMD has the ability to pay off the debt.

Acquisition of ATI was a huge mistakes. It didn't generate extra revenue as expected. Based on the financial informations I have collected in past few years, AMD is killed by the interest payment for the loan that was used to acquire ATI.

I wouldn't say that the ATi acquisition was a big mistake, if AMD originally had the cash to build more fabs before buying ATi, they wouldn't be in such a bad position.

Of course, I don't think AMD ever had enough money to build extra fabs, since 30 and 35(36?) put them far into debt.
 
Yes I agree, they wasted far too much money FINANCING the ATI purchase.

That, and as I have mentioned in the past, AMD chased the glory in the CPU market and allowed their Spansion NOR flash unit to wither-away and die. This was probably their biggest mistake.

Spansion was bringing in yearly revenues of over 2 BILLION at their peak:

http://www.prnewswire.com/news-releases/spansion-reports-third-quarter-2006-results-56561987.html

Instead of investing in NAND flash as a path to continued growth, AMD used the profits (yes, I said PROFITS from an AMD venture!) to partially fund their two fabs in Dresden, and then spun Spansion off to die.

They sunk roughly 2.5 billion dollars into each of their fabs, and today they've had to write that off (and they still lose money in CPUs). Ditching one of those planned fabs and keeping the flash business would have given them greater diversity, something a small player like AMD dearly needs.
 
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This is the second or third time in recent history that AMD has said something about getting out of the PC business, they just don't go through with it.
 
Actually their biggest mistake was selling off their mobile phone chip unit to Qualcomm...
 
Acquisition of ATI paved the way for Fusion and got AMD a massive piece of the gaming console market. When they say "GPU" they mean discrete graphics. That market is shit.
 
intel CPU monopoly ? i can see it now.. 2015 the i7500k goes for 900$
 
intel CPU monopoly ? i can see it now.. 2015 the i7500k goes for 900$

People who say this obviously have zero understanding of how economics work. The market can't handle the bulk of Intel's CPU's going for prices like that because few people buy computers at that price point. When most of the computers sold are going to be less than $1,000 for the entire machine and probably closer to the $600 mark, you are just way off with that statement. If AMD died tomorow, almost nothing would change. Intel's prices and product line would likely stagnant in the desktop market for awhile and that may be the only effect. Then again if Intel doesn't keep the product lines evolving then they end up creating a used computer hardware market that's already bigger than it currently is. It also means that new processor sales may slump more than they already have. So in turn Intel really needs to keep evolving the technology so it becomes obsolete fast.

In short, AMD dying wouldn't be as big a deal as you think it might be. At least not in the short term.

And AMD isn't dying yet. They haven't given up on the desktop. They've simply shifted their focus because they can't afford to concentrate on a diminishing market against a company that has them vastly out matched. So they are concentrating on mobile and server markets where they are doing well. Their restructuring is simply a means to further their market share in those businesses. A change of emphasis isn't the throws of death. It's called adapting to your market.
 
AMD is dying a slow death, I don't care what anyone says, its not "if" but "when" its actually over for them. AMD should be focusing all of their efforts on their graphics division where they still actually have good products, R&D, market share, and profits. I hate to suggest that AMD should close up shop on their CPU business which would put a LOT of people out of a job, but as a company, there's just no way to turn this back around in my opinion with the funds and budget they're working with. Its a sinking ship, its just a matter of how long they want to delay the inevitable.

AMD(ATI) still has a chance to make it and still be very successful against Nvidia. AMD needs to put all their focus there.
 
And AMD isn't dying yet. They haven't given up on the desktop. They've simply shifted their focus because they can't afford to concentrate on a diminishing market against a company that has them vastly out matched. So they are concentrating on mobile and server markets where they are doing well. Their restructuring is simply a means to further their market share in those businesses. A change of emphasis isn't the throws of death. It's called adapting to your market.

Pretty much this.

If your margins are razor-thin that it prevents the company from investing in other markets, then a restructure is needed even if it means a significant amount of your own employees being laid off. Employees are counted as part of your operating expenses, and that cut into any operating income.

If you think about how much has been invested so far in what AMD is doing-- adding ARM as a partner, buying SeaMicro, and similar-- extra operating income would be needed to invest or improve current or new product lines. These can be diverting resources into expanding your mobile processors and improving your server processors.

Simply: You need money to make money. If AMD wants to do that, then there will be sacrifices made-- figuratively and literally. Every company does it no matter the field or market they're in, even if it's in the face of the UAW at one of The Big Three automakers.

It's been said time and time again, the market and the consumers of that market are shifting to more mobile devices. It's already been predicted years ago by the likes of Bill Gates or similar that the "future is mobile" whether we want to accept it or not. Smartphones are getting faster and more multi-functional. Tablets are getting better and faster, and may sooner replace notebooks. The desktop computer market has been gradually decreasing each and every year. Heck, read the news in the [H]ardOCP Front Page News forum and it's practically writing on the wall.

Intel knows this. They've reported less revenue than last year because of the stagnating desktop computer market, even if they reported a positive revenue for this fiscal quarter. AMD shares the same sentiment as well even if reporting $1.27 billion dollars in revenue this quarter. ARM? Qualcomm? Texas Instruments? Apple, even? No worries there because their mobile products are selling and are in tens of millions of mobile devices today from smartphones to tablets.

Intel is doing their best to enter this mobile market currently dominated by ARM and Qualcomm. They've started with Medfield and will be introducing new Clover Trail Atoms next year. AMD, late as usual, is just starting to introduce their new Hondo and upcoming Zacate processor replacements for tablets. Hopefully, they'll move into the smartphone market as well that Intel is just barely scratching the surface with Medfield-based processors.

Even Microsoft is late to the game. Windows Phone 7 was introduced just a few years ago and still hasn't gained as large of a marketshare as Nokia-, Apple- or Google-based products, and even Amazon. It hasn't caught on with consumers as well as Apple or Google has with their respective mobile devices. Even a survey from a few years ago, if you want to believe that, has consumers thinking that Microsoft has no place in the mobile market given they already have it on their computers. I'm sure this attitude will change soon with Windows Phone 8 and Windows 8 RT since it'll offer better connectivity and a more cohesive ecosystem near the level of Apple's iOS and their related products. That is something Windows 7 was unable to do. Hate Windows 8 as much as you want but Microsoft sees this market as something they cannot miss. They've just opened their own music store, and possibly movies and TV shows next to compete with Apple, Google, and Amazon. I would not be surprised that the next Xbox console will be as connected to this new Microsoft ecosystem than the 360 currently is with better access to your media and files on your computer, (Windows 8-based) tablet and Windows Phone 8 smartphone.

I will say it again as I said it before: If AMD wants to effectively compete, they should seriously consider acquiring an ARM license. With Windows 8 and Windows 8 RT coming to the tablet space for both x86 and ARM tablets, attack it from both ends. You have Hondo already for the x86 part, wouldn't it make sense to enter the ARM market as well. AMD makes really good integrated graphics parts. Why not combine a Radeon GPU core with an ARM core and have a new kind of APU. They're already partnering with ARM for an ARM-based security core for their mobile processors, why not take it further? This will put AMD squarely in the crosshairs of Nvidia's Tegra, and their GPU can compete against PowerVR SGX line and Adreno GPUs. (Of course, there is still that prickly issue of power consumption, but I'm sure AMD can figure that out.)

In the end, it isn't AMD dying. Maybe Rory Read knows something that we don't and is doing something Ruiz was unable to do in his incompetent reign at AMD. All we can do is just wait and hope AMD survives this.

The market still needs AMD and Intel still needs them. Innovation comes from competition, something that can't be denied. Like Dan said, in the short term, without AMD we won't see a significant change in prices. However, in the long term, without AMD, innovation will stagnate in the desktop market and that we cannot have. We'd probably end up with Intel's tick-tock strategy being improvements years apart instead of improvements per year.
 
AMD is dying a slow death, I don't care what anyone says, its not "if" but "when" its actually over for them. AMD should be focusing all of their efforts on their graphics division where they still actually have good products, R&D, market share, and profits. I hate to suggest that AMD should close up shop on their CPU business which would put a LOT of people out of a job, but as a company, there's just no way to turn this back around in my opinion with the funds and budget they're working with. Its a sinking ship, its just a matter of how long they want to delay the inevitable.

AMD(ATI) still has a chance to make it and still be very successful against Nvidia. AMD needs to put all their focus there.

People have thought AMD was going to fail for over two decades. It hasn't happened yet.
 
so AMD has no effect on Intels price point? you're right I do not have an understanding of economics, Its pretty far from my are of expertise. Just always assumed the two competitors have an effect on each others prices and without competition they are able to keep a moderately high price instead of having to lower due to cheaper solutions generally provided by AMD


I was exaggerating for emphasis of my point above btw..
 
so AMD has no effect on Intels price point? you're right I do not have an understanding of economics, Its pretty far from my are of expertise. Just always assumed the two competitors have an effect on each others prices and without competition they are able to keep a moderately high price instead of having to lower due to cheaper solutions generally provided by AMD


I was exaggerating for emphasis of my point above btw..

It isn't fair to say that AMD has zero effect on Intel's pricing strategy. But AMD leaving the market wouldn't cause huge surges in Intel's CPU pricing. When AMD had faster CPUs Intel's offerings were priced to undercut AMD's in an unusual role reversal. Yet they still always had the $1,000 Extreme Edition CPUs regardless of whether or not they made any sense. Since AMD has been returned to second place where they've spent most of the last couple of decades or so, AMD aggressive budget pricing has had the effect of making Intel offer better products in similar price points than they might ordinarily have.

Intel would probably still have CPUs in those same budget ranges because OEM's and everyone else in the industry has to meet consumer demands for cheaper products. But AMD forces Intel to offer more powerful CPUs in that price range than they might ordinarily have. And in fact their aggressive tick tock strategy and trickling down CPUs would probably happen at a much slower pace than what we see today. In all of these AMD doom and gloom threads, someone always comments on how we'd end up with $200 or $300 price hikes across most of Intel's product line can't seem to grasp that this can't happen. Prices are set by a free market. Competiion is just one factor in how pricing is set. Supply and demand being the other. The demand currently is for cheaper and cheaper consumer electronics. Intel can't afford $200 or $300 price hikes or even $100 in all likelyhood because no one buys PC's that are expensive enough to absorb those cost increases. There is little margin in this industry these days.
 
People have thought AMD was going to fail for over two decades. It hasn't happened yet.

More like less than a decade. In 2003 when SledgeHammer came out, the rumor was that AMD would crush Intel.

But almost a decade later, it has failed. They just don't want to recognize it.

Thing is that AMD has failed to increase CPU performance significantly since the Hammer times, while intel increased performance by orders of magnitud compared to the old P4.
 
Tablets and smartphones are not able to replace laptops.
Smartphones and tablets are something I personally(but seems alot people)find very annoying to use for basic computing tasks such as browsing internet or viewing pictures or videos or whatever else. They are now "in" current trends and that's all, but their use is very unpractical and time consuming rather time effective and it will stay like that for some time. While laptops and desktops have been here for a decades, and although the market is slightly smaller by now, that doesn't mean they get replaced any time soon and that doesn't mean that the number of existing computers is decreasing. The simple reason is that the market is filled now, seems only the people who don't want to own computer, don't have one. Companies got used in the past to fact that market was expanding, that's the thing that currently ends. There will be still alot of to sell but not as much, probably only as replacement for no longer working computers, and upgrades. Although the speed of upgrading is drastically slowing down as well because, hardware performance is greatly higher than software is able to work with.
It's getting to the point where we have enough of computers, phones, cars, and all the stuff that was part of technological evolution in previous century. The market in the future is going to and probably it should be focused on decreasing the power consumption, simplifying circuitry and developing better propulsion and power storage systems. It's no longer about raw performance either electrical, mechanical or computational, in this case diminishing competition among consumer-oriented manufacturers, with the bigger ones having a better chance of surviving. Future for AMD is unsure however for some time already.
 
It isn't fair to say that AMD has zero effect on Intel's pricing strategy. But AMD leaving the market wouldn't cause huge surges in Intel's CPU pricing. When AMD had faster CPUs Intel's offerings were priced to undercut AMD's in an unusual role reversal. Yet they still always had the $1,000 Extreme Edition CPUs regardless of whether or not they made any sense. Since AMD has been returned to second place where they've spent most of the last couple of decades or so, AMD aggressive budget pricing has had the effect of making Intel offer better products in similar price points than they might ordinarily have.

Intel would probably still have CPUs in those same budget ranges because OEM's and everyone else in the industry has to meet consumer demands for cheaper products. But AMD forces Intel to offer more powerful CPUs in that price range than they might ordinarily have. And in fact their aggressive tick tock strategy and trickling down CPUs would probably happen at a much slower pace than what we see today. In all of these AMD doom and gloom threads, someone always comments on how we'd end up with $200 or $300 price hikes across most of Intel's product line can't seem to grasp that this can't happen. Prices are set by a free market. Competiion is just one factor in how pricing is set. Supply and demand being the other. The demand currently is for cheaper and cheaper consumer electronics. Intel can't afford $200 or $300 price hikes or even $100 in all likelyhood because no one buys PC's that are expensive enough to absorb those cost increases. There is little margin in this industry these days.

Where were you in 2003?
http://www.hardocp.com/article/2003/09/23/athlon_64_vs_pentium_4
 
More like less than a decade. In 2003 when SledgeHammer came out, the rumor was that AMD would crush Intel.

But almost a decade later, it has failed. They just don't want to recognize it.

Thing is that AMD has failed to increase CPU performance significantly since the Hammer times, while intel increased performance by orders of magnitud compared to the old P4.

Prior to the launch of the Athlon, no one dreamed that AMD could ever beat Intel in performance. The fact is AMD and Cyrix were "the other guys". They essentially made knock offs of Pentium chips as they had done with earlier chips. That wasn't accurate as they weren't knock-offs, but rather poor performing original CPUs. For the bulk of the last 20 years that I've been in this industry professionally, and as a hobby, AMD has taken a back seat to Intel in terms of performance. Much of the Athlon days being the exception, rather than the rule.


Not sure what you are referring to. I believe that article was written slightly before the actual launch or rather the availability of the Extreme Edition. (I know they were announced in September at the very least.) As I remember it, the Extreme Edition was always $1,000. And Intel kept their pricing somewhat less than that of AMD for most CPUs. Aside from the Extreme Editions. And this was how it was for the most part with the undercutting of AMD really reaching it's peak during the Athlon X2 days just before the launch of the Core 2 Duo. Indeed my Athlon 64 3800+ was more expensive than Intel's "equivalent" CPU was at the time.
 
Prior to the launch of the Athlon, no one dreamed that AMD could ever beat Intel in performance. The fact is AMD and Cyrix were "the other guys". They essentially made knock offs of Pentium chips as they had done with earlier chips. That wasn't accurate as they weren't knock-offs, but rather poor performing original CPUs. For the bulk of the last 20 years that I've been in this industry professionally, and as a hobby, AMD has taken a back seat to Intel in terms of performance. Much of the Athlon days being the exception, rather than the rule.



Not sure what you are referring to. I believe that article was written slightly before the actual launch or rather the availability of the Extreme Edition. (I know they were announced in September at the very least.) As I remember it, the Extreme Edition was always $1,000. And Intel kept their pricing somewhat less than that of AMD for most CPUs. Aside from the Extreme Editions. And this was how it was for the most part with the undercutting of AMD really reaching it's peak during the Athlon X2 days just before the launch of the Core 2 Duo. Indeed my Athlon 64 3800+ was more expensive than Intel's "equivalent" CPU was at the time.

Well you said AMD has been number 2 in the last couple of decades. I'll assume you say performance wise. That's why I ask about 2003 when the opteron appeared and claimed the performance crown again.

And yes Athlon 64 were expensive when they came out. P4 could barely keep up with Athlon XP. So AMD could charge a premuim for its flagship.

I still have a working A64 3800+ on a nforce3 mobo. One of the best rigs I've built,
 
Actually their biggest mistake was selling off their mobile phone chip unit to Qualcomm...

Absolutely. It's sad cause that would be a huge money maker and they could of been a huge inevator in that area with the tech have now and are working towards.
 
Well you said AMD has been number 2 in the last couple of decades. I'll assume you say performance wise. That's why I ask about 2003 when the opteron appeared and claimed the performance crown again.

And yes Athlon 64 were expensive when they came out. P4 could barely keep up with Athlon XP. So AMD could charge a premuim for its flagship.

I still have a working A64 3800+ on a nforce3 mobo. One of the best rigs I've built,

He said MOST of the last couple of decades, and he's right.
 
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