1.09.2008

~$1.5B Anyone?

With the current price AMD’s stock is trading today, all you need is roughly $1.5B to take a majority stake in the company. Of course this is theoretical as such move requires approval from regulators, AMD’s board of directors and a lengthy cross-license negotiation with Intel. Trading at a 52-week low of $5.53, more investors abandon AMD's stock amid fears that a U.S. recession could be the final straw that would bring the company into insolvency.

After several days of trending synchronously with AMD due to a series of sector downgrades, Intel traded up today on a repot from Gold Sachs:
"Intel is very well positioned to continue to gain (market) share, particularly in servers, given AMD's disappointing execution," Goldman analyst James Covello wrote in a report (probably after readings some fierce comments from Sparks).

Meanwhile investors continue to dump AMD probably just for the sake of pissing Hector Ruiz even further. An open letter from Mr Douglas McIntyre (24/7wallst) calls on AMD’s board to dump Mr Ruiz who seems to be the only person in the world who doesn’t understand why the stock continues to slide.
An Open Letter To Frank Clegg, AMD (AMD) Board Member: “As a member of the AMD (AMD) board, you know how deeply disappointed the market is with the performance of the company's CEO Hector Ruiz. AMD shares hit another 52-week low today at $5.77. Wall St. has lost faith in the company's ability to release products on time and improve gross margins.”

When a company loses around $2B in a good year, one of the best the industry has seen in quite a while, just imagine how things could turn out if the economy enters a recession... And just when you thought things couldn’t possibly get worse.

32 comments:

Tonus said...

I can see it now...

Interviewer: So, what do you think about AMD's execution?

sparks: It can't come soon enough, if you ask me.

I can't help but be hopeful that AMD will weather the storm and still be around for the future. They're doing their best to squash whatever optimism I have, but we'll see. 2008 could be another of those years where "AMD did well" means "AMD didn't completely collapse."

InTheKnow said...

I firmly believe AMD will continue to exist in some form or another. There is just too much money to be made to leave the whole microprocessor market just to Intel.

The big question in my mind is how much lower does the stock have to drop before someone decides it's too good to pass up and buys out the whole operation, lock, stock and barrel?

SPARKS said...

Tonus well said, and my sincerest apologies if I offended in any way, during my tenure here on this site. These aside, please allow me to explain. You see, I am caught between two extremely dynamic forces here. On one hand, I empathize with you as we are seeing the historic fall of a multinational, multibillion dollar, great American company. Many American families have been and will be affected by an AMD loss.

The many proud and hard working individuals associated with the company, from process engineers and architects, to the people working in the company cafeteria, will lose their jobs. This is bad, as many talented people are hurt by such a catastrophic failure. No doubt, this will create a negative ripple effect throughout the entire industry from an infrastructure perspective.

Additionally, there are many people who have had great success with AMD’s products. Be it fanboy, supporter, underdog champion, whatever; they did show the world that they could produce a great product, and give the big guy a bloody nose.

On the other hand, during the past eighteen months, with absolutely no regard for anyone (especially of those mentioned above), they deliberately and willingly mislead everyone with their outlandish claims and promises. This was all designed to buy time for a tragically bad corporate decision, made by an extremely arrogant hand full of foolish individuals. The loss of billions to individual share holders, 401K holders, partners, vendors, et al, is incalculable, to say the least. In addition, to exacerbate their own failures, they are taking down one of my personal favorites, for over a decade, ATI.

This is a great example of another great multination, multibillion dollar company sustaining collateral damage from an extremely bad, ill timed, overpriced, absolutely absurd corporate decision. Wrector simply gave them an offer they couldn’t refuse, nearly 6 billion, generating brilliant profits for those in the right position, with short term interest payments, deal making commissions, and former ATI shareholders

There are those on this sight who truly believe that this was a must do, do or die strategic platform merger, based on future cheaper platform markets. I say horseshit. You simply can’t gamble TWO companies futures based on assumed marketing treads, i.e., the platform, where an extremely cheap cross license would have sufficed, not with 5.4 billion you don’t. Not with INTC and NVDA lurking around the corner with huge bats and deep pockets. Concentrating on processors was the key, not dreams and debt.

The brokers, the banks, the deal makers, made millions on the deal. With the two outstanding convertibles, falling value, failed product line, and now market downturn; the real losers will be share holders and people without jobs in two companies due extremely bad judgment by a select arrogant, short sided, few.

I empathize with you, my friend. It is absolutely despicable. Sometimes to be proven right, doesn’t mean its going feel good. It doesn’t. I didn’t lose money or my job. But many did.

SPARKS

Ho Ho said...

Rumours are circuling that B3 might not have fixed the TLB bug. Though I admit I've only heard it once on a forum (B3D) so far and it may very well not be true. If anyone knows anything more let us know.

Anonymous said...

'There are those on this sight who truly believe that this was a must do, do or die strategic platform merger, based on future cheaper platform markets.'

For AMD it was a must do... it was either die a slow and prolonged death or risk a quick one with at least an outside chance of hitting a homerun. My best guess on the rationale was that AMD may have known it would be impossible to sustain a lead over Intel on CPU and AMD's best chance of long term growth was to develop a new market (fusion)

The strategic blunder, in my view, was the market share at all cost strategy which killed ASP's, killed free cash flow, and made it increasing difficult to recover from the ATI acquistion costs/debt.

Would AMD be any better off today without ATI? K10 would still be in the position it is in, their process technology would still be behind and inferior, CPU pricing would still be aggressive, and Fusion (to me this is AMD's last chance at a homerun if they can hold out that long) wouldn't even be on the drawing board and they'd still be struggling on the platform (corporate) business.

It was a risky move, and in hindsight they overpaid for ATI, but really what other choice did they have?

And as for killing 2 companies, if something drastic happened (BK), the ATI division could be sold/spun off rather easily; AMD (CPU) would be more difficult due to the potential X86 cross license issues.

Anonymous said...

'Rumours are circuling that B3 might not have fixed the TLB bug.'

There was mention of AMD launching an 'energy efficient' K10 at 1.8GHz on the B2 stepping toward the end of Q1. This move seems rather odd considering this was the original timeframe AMD was expecting B3 to be out...and the speed seems to be a bit low...not validation of the rumors but another data point which could fit that model.

Anonymous said...

'The big question in my mind is how much lower does the stock have to drop before someone decides it's too good to pass up and buys out the whole operation, lock, stock and barrel?'

It depends on how long it takes that person's lawyers to figure out a way around the X86 cross license terms...which appear to be restrictive with respect to the cross license being able to survive an acquisition.

Roborat, Ph.D said...

B3 is the next plan of record stepping that fixes the bug. If the new silicon they processed in last November does not fix TLB then they wouldn’t label it as B3. (sorry, i’m just being a twat).

But what the rumour says isn’t far fetched. There is a good chance that other problems crop like:
1) AMD discovers more bugs besides the TLB
2) The changes introduced does not fix the bug
3) The changes introduced creates another bug
4) The changes introduced affects performance or critical device characteristics
5) The changes introduced is not easy to manufacture
In fact, if worst comes to worst, AMD could discover that K10 isn’t workable and accelerates the next design while continuing to produce crippled processors.
But what is more likely is that AMD has validated the solution and is running several lots with smaller iterations to make sure they come up with at least one working silicon. Surely, they’re not hoping that everything will be fixed with just one try. AMD wouldn’t do that, right??!?!

pointer said...

Someone said ...
For AMD it was a must do... it was either die a slow and prolonged death or risk a quick one with at least an outside chance of hitting a homerun. My best guess on the rationale was that AMD may have known it would be impossible to sustain a lead over Intel on CPU and AMD's best chance of long term growth was to develop a new market (fusion)


Actually, Intel has the CPU and IGP all along. The move of AMD buying ATI might not be really to create a new market, but an reaction to what Intel would do in its future roadmap.

Tonus said...

sparks: "Tonus well said, and my sincerest apologies if I offended in any way, during my tenure here on this site."

Oh, not at all! I was adding that bit as a joke, the old saw about using the dual-meanings of the word "execution." It didn't strike me until now how the comment might be construed.

I didn't mean for it to seem as if I was criticizing your attitude here, I've enjoyed your posts as much as those of the other regulars here. I just thought it would be a cute joke. :)

Sorry for the confusion!

Tonus said...

"It depends on how long it takes that person's lawyers to figure out a way around the X86 cross license terms...which appear to be restrictive with respect to the cross license being able to survive an acquisition."

I think that Intel would be willing to extend the licensing agreement to a new buyer, although what they may do instead is offer a new deal with similar terms (though these would be more favorable to Intel).

It won't satisfy the anti-monopolists entirely, but it shows a willingness on Intel's part to play nice. More importantly, it removes that excuse from the anti-monopolists' kit. People can accuse Intel of unfair trade practices, but there is no denying that AMD has had the biggest hand in their own troubles.

Anonymous said...

"I think that Intel would be willing to extend the licensing agreement to a new buyer"

I think it depends on the buyer and the terms... but this is yet another potential hidden cost when someone potentially wants to buy AMD. Maybe no longer it is 1.5Bil if Intel asks for additional money to extend the cross license to the new buyer. This is why it remains naive to use market cap as a buyout price.

Anonymous said...

"Actually, Intel has the CPU and IGP all along."

The first to market with this product has a chance to set the foundation here - though for AMD this will be more difficult as Intel will still garner support with its solution due to its market share size (unless of course theiresolution turns out to be total junk).

AMD cannot compete on cost, is having a hard time keeping up on Si process technology, and it looks like it is having a difficult time now keeping up with CPU design. If they fall behind in any of these areas, then they need to be SUPERIOR in one of these areas just to compete (as was the case with the K8 design).

If they can't do this, they're only hope for long term, healthy, survival is to carve out a new space - I think the ATI acquisition was not just a play for 'platformance' (which AMD needed for the commercial market), but also an attempt to carve out a new market.

As for the first to integrated GPU/CPU, as with almost all 'innovations', it is nearly impossible to tell who was first. AMD announced it first but that is somewhat meaningless as Intel could have been working on it for some time behind the scenes. You could count Intel's Timna as first but that project was canned and obviously Intel has not seen a market need for that type of solution since then (until recently).

Also you can't really use the merger of ATI and AMD as the date for when AMD may have come up with this - I would have to think (but obviously can't prove), AMD had this in mind BEFORE the acquisition talks began. Who knows they may have even attempted things internally only to find out they did not have the expertise and needed to buy ATI.

So rather than argue the semantics over who was first, I think AMD saw it as an opportunity to move into a new space FIRST and potentially get footing in a new market. Whether or not the ATI acquisition turns out to be successful (or this plan is executed properly), I don't see what other choice AMD had. What was plan B? Slowly wither away as Intel continued to extend their process technology lead, catch up on design (with Core 2) and just hope they fall down again sometime in the future for 2-3 years (like they did with P4)?

SPARKS said...

Apparently, AMD has political friends here in my home state, the great state of New York. Andrew Como, son of the son of bitch of a father, Mario, the same man who allowed LILCO to build a 3 B nuclear power plant, on the asshole of Long Island, wouldn’t allow them to run it, subsequently, it cost the tax payers/consumers another 3B to dismantle it, is in the news today.

Probably peeved at AMD’s dismal financial status, thereby losing the AMD/New York boondoggle, he has served notice he is going after INTC. Yes Virginia, anti trust investigations. If this isn’t political retribution, I don’t what is. Maybe he’s annoyed that they spent/wasted 150 M in infrastructure to support the now, all but dead, deal.

So, it seems when the Scrappy Little Company can’t live up to it’s rant of fair market competition; they need lawyers, politicians, and foreign nations to help them against big bad INTC. Further, my, state, local, property taxes, auto insurance, and utilities are the highest in the nation. Now, they're going after multinational corporations. This is just what we need in the great state of New York. Mario would be proud.

http://news.moneycentral.msn.com/ticker
/article.aspx?Feed=AP&Date=20080110
&ID=8020598&Symbol=INTC

SPARKS

Anonymous said...

'Apparently, AMD has political friends here in my home state, the great state of New York. '

I'm happy to call myself an ex-NY resident... but how else is NY going to fund the AMD fab subsidies? (As if AMD is going to go ahead with this!)

Cuomo is clearly trying to make a name for himself outside of NY...anyone in power in NY is always looking to trade up... heck it's possible you'll have THREE New Yorkers running for president (Hillary, Giuliani, Bloomberg) later this year, though calling Hillary a New Yorker is like calling AMD's financial position strong. Cuomo's also investigating financial companies for the subprime mess (also mostly to make political hay).

Anyway enough politics... I just don't see this going anywhere unless the FTC gets involved, which the don't apparently seem willing to do.

Anonymous said...

"AMD Delays High-End Phenoms, Introduces Low-Power Version"

http://www.extremetech.com/article2/0,1697,2247404,00.asp

'AMD tells us the delay isn't due to manufacturing problems, but instead because their OEM vendors have requested a low-power version. So AMD will soon release a new model, the Phenom 9100E, running at a conservative 1.8 GHz and drawing at most 65W of power.'

You know this sounds familiar... can't quite place it... oh yeah the Barcelona "launch" (and I use that term liberally) last September. Potential quad core desktop customers are demanding energy efficiency? Are you freakin kidding me?!?

If I were an OEM, after the crap that AMD served up this last year while calling it steak... I would call BS and say they would like a higher performance part that can compete with Intel but AMD is unable to produce them. A desktop quad at 1.8GHz!?!? Why bother!

Was it not last year when the mini-nuclear power plant known as the QUADFATHER was rolled out and the claims then were: at that target audience power is not that big a deal...

The "because customers are demanding it" excuse smelled like a dead fish when they used it for Barcelona's problems, now it has festered into a stench as that same fish appears to be rotting as they roll it out as an excuse for a second time.

You know it's bad when in the same article:

"Obviously the company tried to put a positive spin on things, but we can't help but think that if they really could produce Phenoms at the right clock speeds in the right quantities, they would have no problem satisfying the markets for both the 2.4/2.6 GHz chips as well as a new 1.8 GHz model."

Looks like AMD's free ride in the press is now over as the continuous misrepresentations have tarnished any believability AMD has.

Anonymous said...

Oh and some more spin from that article:

"One bit of good news: the "B3" stepping of the Phenom CPU, which fixes the much talked-about TLB errata, is back from the fabs and looking good. Also, the triple-core and dual-core chips appear to be on track."

On track with the RE-RE-RE-REVISED SCHEDULE. The VERY FIRST schedule had dual core K10's in late Q4 with volume in Q1...this quickly changed to Q1... then switched to Q2... but it's 'on track' now...

Again, if B3 is back from the fabs and looking good, why launch an "energy efficient" (read slow as dirt) processor "soon" - by the way if it truly is "soon", why can't AMD provide an actual date? Is their state of the art, world class, APM innovating fab have that poor planning?

It would be funnier if things just weren't so sad.

pointer said...

So rather than argue the semantics over who was first, I think AMD saw it as an opportunity to move into a new space FIRST and potentially get footing in a new market.

Actually I am not trying to argue whi is first ... and AMD seems to like to claim all credits ...

Anyway, I have Intel insider information (without saying i am or am not an insider :)), saw some kind of CPU+GPU roadmap (without revealig too much info :)), before AMD talks about its fusion.

And well, i cannot backup my claim. I do not mind anyone to label my above statement as intel-fanboi-ish. It is just irritating to see AMD claim-its-all behaviour (later they or the AMD fanboi will claim intel copy this again...) ... both companies deserves their credits on the innovations they contributed, just that AMD and its fanbois like to discredit the other one.

Anonymous said...

'Anyway, I have Intel insider information (without saying i am or am not an insider :)), saw some kind of CPU+GPU roadmap (without revealig too much info :)), before AMD talks about its fusion.'

Unless you have inside information from BOTH companies, this claim is meaningless. I'm not the biggest AMD fan, but I'm sure AMD started working on/planning Fusion for some time before they announced it. (Or do you think they did the merger and then came up with their plan after?) Either way it does not matter who makes what claims - it is much like IBM with their process claims...until an actual product is out there, companies can take credit for whatever they like, it's just words. Which is why this is a semantics argument and probably not worth continuing.

And if someone said they had AMD inside information which contradicted yours, would you believe them?

pointer said...

And if someone said they had AMD inside information which contradicted yours, would you believe them?

I did not claim Intel is first with the idea, all I said is, referring to my original statement - Actually I am not trying to argue whi is first

Someone can have AMD insider information and claiming they have the idea long ago ... it doesn't matter. All I pointed out is that Intel actually is not copying (at least for this one). Ideas can come out from different places, sometime more or less close in time.

Nonetheless, i am not against copying actually. Copy stuff legally, nicely and improve base on that is a practical engineering practice. Innovation doesn't always means totally new thing. Virtually all company copy each other one way another. Just that the 'A' company likes to take too much of credits and discredit others.

Tonus said...

I don't care if the companies copy from each other, as long as they're doing it within legal bounds. If you can improve your product by adding a certain technology, that's great. If you can further advance the technology as a result, that's even better.

oneexpert said...

AMD STOCK and MARKET SHARE BOTH RISING QUICKLY

AMD is expected to garner massive market share increases from intel in the 4th quarter of 2007 and the 1st quarter of 2008.

The huge demand for barcelona and phenom quad cores has created some slow fill order completions.

intels so called quad cores are piling up in inventories everywhere cause nobody is buying them while AMD quad orders and purchases are constantly rising.

AMD has the only real state of the art quad core design which is soon to be copied by intel.

Because of AMDs superior quad core designs recent investors have poured 700 million dollars into AMD rising stock.

BUY AMD hi performance, energy saving, low cost, most often copied, cpus, platforms, and video solutions.

Ho Ho said...

If one would believe TheInquirer and B3 really is fine and there won't be any more 65nm K10's then that puts interesting spin to the matters. Basically it would mean that best thing AMD will have is 2.6GHz 140W TDP K10 to fight against Nehalem until Shanghais are released.

Joe said...

AMD STOCK and MARKET SHARE BOTH RISING QUICKLY

Hector Ruiz!! I didn't know you read this blog!!!

Anonymous said...

"Basically it would mean that best thing AMD will have is 2.6GHz 140W TDP K10 to fight against Nehalem until Shanghais are released."

No offense HoHo, but I did not read 2.6GHz anywhere. I know it was part of the original plan, but simply fixing the TLB bug doesn't make the clock faster on these chips. I wouldn't be surprised if B3 topped out at 2.4GHz, with perhaps a push to 2.6GHz in H2'08 as AMD starts to get their 65nm process under control. Keep in mind, the original AMD plan had 2.6GHz at launch, then by end of 2007, then by Q1'08... it also had dual core K10's in Q4'07.

No more 65nm steppings is probably the right business decision. If parts are not out until Q2 (probably mid/late), another stepping would mean late Q3 or Q4 in all likelihood and that is starting to rub up against 45nm. AMD still also has to do steppings for dual core K10's. All of these steppings are expensive - masks, validation Si, and to a lesser extent the engineering resources and tool capacity.

Though I don't think 45nm is as close as people think. Best guess is probably late Q3'ish/early Q4 for small amounts of actual product you can buy for AMD to save face - these will be those 'energy efficient' chips that every one is demanding (read: low clock speeds). Actual 45nm product will likely be in Q1'09.

Anonymous said...

oops - sorry HoHo... you said the best AMD could have... I misread your comment.

Anonymous said...

Pointer - you are off track - go back and read the early posts, you were the first to bring up actually Intel had it first (which really doesn't matter) and start the whole who's copying, who's first, who's innovating...

The original post you responded to was about AMD perhaps acquiring ATI in order to break into a new market (integrated CPU/GPU) first. You seem to have misread this into me saying AMD was the first to have this idea. It doesn't matter who came up with the idea first, the first to get to market can potentially gain an advantage and have an advantage in setting the standards.

Clearly the ATI acquisition will help AMD speed up their schedule as they did not really have the expertise in house on the graphics side. Whether or not they will be first to market remains to be seen, but I think this was a key aspect/reason behind the ATI merger (in addition to developing platform capabilities). There was no way AMD would have a chance to beat Intel to market with Fusion had they not acquired ATI.

Please don't turn this blog into a fanboy, this company came up with the idea first... it just doesn't matter to me (and probably to most)... making claims of seeing inside information also doesn't matter as there is no way to prove or disprove those assertions.

pointer said...

Pointer - you are off track - go back and read the early posts, you were the first to bring up actually Intel had it first (which really doesn't matter) and start the whole who's copying, who's first, who's innovating...


please help to qoute the word that i said so ... i really do not know which part indicating intel first or what so ever.

if you are referring to my word on earlier post -
Actually, Intel has the CPU and IGP all along. The move of AMD buying ATI might not be really to create a new market, but an reaction to what Intel would do in its future roadmap.
... then i am not sure if you understand the word 'might'. In programmign wise, it translated into

if (AMD knew what Intel will do)
{reason = compete with similar product}
else
{reason = create new competitive advantage}

if you are not referring to the ablve word, please educate me. I think that all my comments

Please don't turn this blog into a fanboy, this company came up with the idea first... it just doesn't matter to me (and probably to most)... making claims of seeing inside information also doesn't matter as there is no way to prove or disprove those assertions.


yes, please do not blog fanboishly ... and do not comment thing just to win statement. I do not know which part of my comment claiming intel is FIRST to come out with the idea and SING high and low on that ... ALL I said was that Intel has also gotten the idea on integrating the GPU into CPU before any AMD public announcement .. hence no copying here. And I am expecting AMD and its fanboy would say the Intel is copy on this .. again, as i commented that AMD likes to claim all credits.

Anonymous said...

Jan 10th, 11:52:

"Someone said ...
For AMD it was a must do... it was either die a slow and prolonged death or risk a quick one with at least an outside chance of hitting a homerun. My best guess on the rationale was that AMD may have known it would be impossible to sustain a lead over Intel on CPU and AMD's best chance of long term growth was to develop a new market (fusion)

Actually, Intel has the CPU and IGP all along. The move of AMD buying ATI might not be really to create a new market, but an reaction to what Intel would do in its future roadmap."

Your response was the last paragraph... you turned my comment of developing a new market, into "actually Intel had this idea first". You're comment on it potentially being a reaction to Intel's roadmap is possible, but the 'actually Intel had it all along comment' cannot be factually supported and adds nothing to the argument.

First to the idea (which is debatable and completely unprovable in either direction) does not mean first to market...

I'm not an AMD fan, but I will not compare your 'I saw an internal document' that came before AMD's public announcement as evidence. First off there is no reason to believe you just because you said it, but more importantly noone knows when the idea was generated within AMD and simply using either the merger date or the fusion announcement is obviously incorrect (unless you think they made a public announcement the day they came up with the idea?) Who knows how long this was on the drawing boards at either Intel or AMD, and frankly it still doesn't matter...

you started this whole mess and have been prolonging it...I'm done...

pointer said...

Actually, Intel has the CPU and IGP all along.

now I see what part of my word confused you. It was meant to be - Intel the CPU technology, as well as IGP technology all along. It is very possible for AMD to think Intel would integrate them some point, as it is an natural evolution in chip integration. And this is the reason is used the word - 'might' and not 'was" - The move of AMD buying ATI might not be really to create a new market, but an reaction to what Intel would do in its future roadmap.

I commented with with a picture in mind - imagining what AMD fanbois like Sharikou would say when the 2 companies eventually have the product out (no matter who's first). They would play with the word Intel copying again.

Anyway, let's stop on this topic. There is nothing much to discuss except english explantion on words :)

luvs otellini said...

Pointer, I know you are just as hot for Paul as I am. I'll bet you have his poster on your bedroom wall too and ky jelly on the night stand.

pointer said...

luvs otellini said...
Pointer, I know you are just as hot for Paul as I am. I'll bet you have his poster on your bedroom wall too and ky jelly on the night stand.


nope, just having his poster would make me not seeing him outside of the room. I have him tinted to my glasses so that i can see him where ever i go.