AMD Announces Proposed Plan to Sell Singapore Facility

[bullzz]

http://www.tomshardware.com/news/amd-singapore-sale-lease,23986.html

hopefully the money keeps them afloat before some profits kick in

 

[podspi]

Here's hoping they have a good plan, and not just staving off the inevitable...

 

[Abwx]

Mr Read business model i think.

Since they are much indebted such an operation would
be profitable if the debt rates are much higher than the
rate at wich they ll lease back the plant , but given
the modest 46 millions amount this shouldnt generate
more than 1.5 million/year of cost savings , still enough
to provide annual salaries to roughly 50 malaysian employees.

 

[GreenChile]

Am I alone in thinking AMD is selling off it's assets to stay afloat? What happens when they run out of buildings to sell? Do they move on to selling IP?

This strategy seems bass ackwards to me.

 

[ShintaiDK]

Am I alone in thinking AMD is selling off it's assets to stay afloat? What happens when they run out of buildings to sell? Do they move on to selling IP?

This strategy seems bass ackwards to me.

The alternative is bankruptcy. You keep selling heartblood as long s you can. But if they continue this way they will run out of things to sell.

 

[SiliconWars]

AMD is a tech company, not a real estate company. The whole idea of sale and leaseback of property is to get cash that is needed *now* while paying a little back in the short term, more long term. In other words it's a loan (repaid as rent) and businesses do it all the time.

 

[myocardia]

AMD is a tech company, not a real estate company. The whole idea of sale and leaseback of property is to get cash that is needed *now* while paying a little back in the short term, more long term. In other words it's a loan (repaid as rent) and businesses do it all the time.

Yes, companies who have balance sheets that don't allow them to qualify for traditional loans from banks do this all the time. That doesn't make it a good thing. Far from it, actually. I wasn't expecting AMD to hit the skids this way so soon. I was hoping that their APU's would somehow save them. I wonder if Sony and M$ have made plans for their consoles, if AMD can no longer produce them?

 

[Idontcare]

Yes, companies who have balance sheets that don't allow them to qualify for traditional loans from banks do this all the time. That doesn't make it a good thing. Far from it, actually. I wasn't expecting AMD to hit the skids this way so soon. I was hoping that their APU's would somehow save them. I wonder if Sony and M$ have made plans for their consoles, if AMD can no longer produce them?

Exactly. This isn't a business decision made from strength, this is a business decision of last resort.

In theory they could always buy the assets back once they stage their comeback and are rolling in the dough. But history shows this basically never happens (the comeback)...unless you are lucky enough to have good lobbyists and can convince the US government that you are critical to the future of some senator remaining a senator, then you are too big too fail and a bailout is coming your way.

AMD is not too big to fail, and at this rate they are only getting smaller.

 

[seitur]

:/

I hope they survive somehow and stay in a business. Their downfall and smaller competition will not mean anything good for me as a client.

 

[myocardia]

Seriously, if I were the Intel CEO at this point, I'd be attempting to devise a way to make a not-too-small loan to AMD. I believe that Intel is in a much better position with AMD not so cash-strapped, that they are selling off their assets. I'm thinking a $1B loan to keep their rival afloat would be a much better way to give away $1B, than spending it on lawyer's fees, in an attempt to keep the government from forcing your company into multiple companies, should Intel become a monopoly.

 

[ShintaiDK]

Seriously, if I were the Intel CEO at this point, I'd be attempting to devise a way to make a not-too-small loan to AMD. I believe that Intel is in a much better position with AMD not so cash-strapped, that they are selling off their assets. I'm thinking a $1B loan to keep their rival afloat would be a much better way to give away $1B, than spending it on lawyer's fees, in an attempt to keep the government from forcing your company into multiple companies, should Intel become a monopoly.

No government would do that. First there is plenty of other microprocessor manufactors and designers. Secondly you only hurt everyone to try make an illusion of competition in a segment that is not big enough to have it. Competition is never always the right path. Specially not in a segment that dont have somewhat fixed cost, but rather an ever increasing R&D expense.

To put it bluntly. Its an economic limit on when you will see the last new CPU on the last node. After that limit is reached, progress will essentially be zero.

 

[myocardia]

Exactly. This isn't a business decision made from strength, this is a business decision of last resort.

In theory they could always buy the assets back once they stage their comeback and are rolling in the dough. But history shows this basically never happens (the comeback)...unless you are lucky enough to have good lobbyists and can convince the US government that you are critical to the future of some senator remaining a senator, then you are too big too fail and a bailout is coming your way.

AMD is not too big to fail, and at this rate they are only getting smaller.

Exactly. It reminds me of Via, starting around the year 2000, I guess it was. And while Via isn't in Chapter 7 bankruptcy, they sure aren't of any consequence to either Intel or AMD, and haven't been for many years now. I hope very much that isn't the same fate awaiting AMD, but it looks as if their management have no answers to their current problems.

 

[myocardia]

No government would do that. First there is plenty of other microprocessor manufactors and designers. Secondly you only hurt everyone to try make an illusion of competition in a segment that is not big enough to have it. Competition is never always the right path. Specially not in a segment that dont have somewhat fixed cost, but rather an ever increasing R&D expense.

To put it bluntly. Its an economic limit on when you will see the last new CPU on the last node. After that limit is reached, progress will essentially be zero.

Sure, no sensible government would attempt to do so, but not many governments are very sensible, either. Also, it wouldn't be the first time the US government has done so: http://en.wikipedia.org/wiki/Breakup_of_the_Bell_System

 

[ShintaiDK]

Sure, no sensible government would attempt to do so, but not many governments are very sensible, either. Also, it wouldn't be the first time the US government has done so: http://en.wikipedia.org/wiki/Breakup_of_the_Bell_System

Telecompanies dont have the same cost either. So they cant be compared. Plus telecompanies essentially got a static income since they are service companies.

There is no alternative if you breakup companies like Intel. Nobody else gonna pour 8B$ in R&D and increasing. Not to mention fab costs of what, 7-9B$? Why do you think nobody touched MS either?

Plus I am sure that the US government uses Intels fabs too.

 

[mrmt]

Seriously, if I were the Intel CEO at this point, I'd be attempting to devise a way to make a not-too-small loan to AMD. I believe that Intel is in a much better position with AMD not so cash-strapped, that they are selling off their assets. I'm thinking a $1B loan to keep their rival afloat would be a much better way to give away $1B, than spending it on lawyer's fees, in an attempt to keep the government from forcing your company into multiple companies, should Intel become a monopoly.

And how AMD would pay Intel back? You are assuming that AMD somehow has a sound plan that will make them profitable again but lack the money to execute it, e.g., they have a liquidity problem.

But is this a liquidity problem? Their big core CPU business is in serious trouble and will be completely outclassed next year, they can't make any money with GPU and the console APUs have ridiculously low margins. The only bright spot is Kabini, but that one is too small to carry alone the entire R&D structure. What might save them is more embedded business and a success in the ARM arena. In any case, this isn't exactly a liquidity problem, but a solvency problem, e.g., they cannot say their current and future products will be able to generate enough cash for them to survive even if they execute well.

Loaning 1 billion to AMD now might save the company if the business plan is sound, but could also mean just giving extra cash to be siphoned by Globalfoundries through the WSA and kicking the bankruptcy can down the road for one or two years and that's it.

As for the government, Intel will point to the ARM crowd big time if the government says they are a monopoly. Were AMD bankruptcy 5 years ago the chances of a government intervention were bigger.

 

[myocardia]

And how AMD would pay Intel back? You are assuming that AMD somehow has a sound plan that will make them profitable again but lack the money to execute it, e.g., they have a liquidity problem.

But is this a liquidity problem? Their big core CPU business is in serious trouble and will be completely outclassed next year, they can't make any money with GPU and the console APUs have ridiculously low margins. The only bright spot is Kabini, but that one is too small to carry alone the entire R&D structure. What might save them is more embedded business and a success in the ARM arena. In any case, this isn't exactly a liquidity problem, but a solvency problem, e.g., they cannot say their current and future products will be able to generate enough cash for them to survive even if they execute well.

Loaning 1 billion to AMD now might save the company if the business plan is sound, but could also mean just giving extra cash to be siphoned by Globalfoundries through the WSA and kicking the bankruptcy can down the road for one or two years and that's it.

I'm thinking a $1B loan to keep their rival afloat would be a much better way to give away $1B

Loans technically don't ever have to be paid back, although my suggestion was a bit more tongue-in-cheek than it may have at first seemed. My apologies if that were the case.

 

[frozentundra123456]

Exactly. This isn't a business decision made from strength, this is a business decision of last resort.

In theory they could always buy the assets back once they stage their comeback and are rolling in the dough. But history shows this basically never happens (the comeback)...unless you are lucky enough to have good lobbyists and can convince the US government that you are critical to the future of some senator remaining a senator, then you are too big too fail and a bailout is coming your way.

AMD is not too big to fail, and at this rate they are only getting smaller.

I saw this earlier and was quite surprised. I though AMD should be in pretty good shape with the console revenue starting to come in and Kabini just out. I doubt either of those is particularly high margin though.

 

[Tsavo]

Seriously, if I were the Intel CEO at this point, I'd be attempting to devise a way to make a not-too-small loan to AMD.

Perpetual x-licensing deal on x86 tech ...there's their 1B to AMD.

Not sure why they'd want to do it, though.

 

[ShintaiDK]

I saw this earlier and was quite surprised. I though AMD should be in pretty good shape with the console revenue starting to come in and Kabini just out. I doubt either of those is particularly high margin though.

Consoles is not that goldmine some people wish to portrait it.

 

[mrmt]

Loans technically don't ever have to be paid back, although my suggestion was a bit more tongue-in-cheek than it may have at first seemed.

I was just pointing that giving/lending/investing money to/in AMD might not solve the company's problem and that the company is irrelevant for government authorities, because the ARM companies will give Intel more competition than AMD ever gave them.

 

[mrmt]

I saw this earlier and was quite surprised. I though AMD should be in pretty good shape with the console revenue starting to come in and Kabini just out. I doubt either of those is particularly high margin though.

AMD stated low double digit. I saw in a report "up to 16%". 1 billion in sales per year will give them 150 million in gross profits, even less in operating profits. In other words, peanuts.

 

[SiliconWars]

AMD stated low double digit. I saw in a report "up to 16%". 1 billion in sales per year will give them 150 million in gross profits, even less in operating profits. In other words, peanuts.

Can you explain to me how Q3 margins are only impacted by 2-3% with such high volume, low margin sales?

 

[ShintaiDK]

Can you explain to me how Q3 margins are only impacted by 2-3% with such high volume, low margin sales?

So high volume MS now scaled back the Xbox One from 21 to 13 countries. :awe:

 

[SiliconWars]

So high volume MS now scaled back the Xbox One from 21 to 13 countries. :awe:

MS's loss is Sony's gain it seems - http://www.joystiq.com/2013/08/22/sony-handling-ps4-pre-orders-as-responsibly-as-we-can/

pre-order numbers are "higher than we've ever seen in 20 years in this business."

Oh, and AMD's of course as they have a monopoly on consoles anyway. :awe:

 

[Tsavo]

So high volume MS now scaled back the Xbox One from 21 to 13 countries. :awe:

More important than a number is what countries got put on the chopping block.