I'm hardly an expert in accounting, but AMD seems to have stabilized and is running a much tighter ship. Some Wall street analysts seem to agree.
I'm glad for AMD. (P.S. My wife owns some Intel stock but my feeling is that a healthy AMD helps Intel stay sharp)
As a non expert AMD to me is suffering from two completely different problems
--------------------------------------------
Problem A) AMD suffering a cash flow problem. It is very very expensive to run fabs and do all the R&D, and the fabs situation with AMD being the only major customer for the fabs was killing AMD. This was a big problem starting in mid 2006 and especially bad to 2009 (the year GF became its own company), and kinda stabilizing right about now in 2012 (AMD owns no more GF stock). The solution to that problem was spinning off the fabs as its own company, in theory the fabs would make money by growing and attracting new customers. The wall street crash of 2008 practically stopping business loans and bonds/debt, and losing your CEO does not help matters.
This was the fear of a
fast death and AMD is relatively safe from the fast death for now, it appears AMD has stabilized.
--------------------------------------------
Problem B) AMD suffers an "execution" problem. AMD will always have less resources than the other tech companies (especially Intel but now ARM), and to execute you need resources, you need talent, and you need luck. AMD has to execute well for it does not have the Intel advantage of better fabs than everyone else (Intel's fabs are a couple years more advanced than everyone else, people will debate
how much more advanced). If AMD does not execute well it will lose marketshare. Furthermore the problem is exasperated that AMD old markets are saturated and growing very slowly, and AMD new markets are very highly competitive.
The problem is AMD has always been hit and miss with the execution. Sometimes AMD hits Home Runs, more often though AMD seems to screw up, merely instead just Bunting, Flyballs, or Fouling it Off. (Bulldozer was an attempt at a home run, but it definitely was not a hit but instead a major Foul).
If AMD can't execute well it won't generate revenue for the market is very competitive and this will be a
slow death
--------------------------------------------
Now Problem A and Problem B are two completely separate problems, like an Infection (fast death) and Cancer (slow death), yet they can affect each other (go on Chemo and suddenly you are less able to fight off an infection.)
AMD always had Problem A with the fabs costing a bloody lots of money, this was true in the 90s as well as the 00s, but AMD was able to execute "well enough" with to cover up the expenses of the fabs, they were able to do so until 2009.
Now AMD doesn't have the fabs (only having to deal with the WSA) and has lowered its expenses (reduced other expenses such as employee costs) it has very little to worry about Problem A. Thing is even now Problem A affects Problem B, by giving up the fabs you lose control over choosing how the fabs design chips changing electrical parameters, you also lose time, and you also lose information all these make it harder for AMD to execute. By giving up some of those "expensive engineers" aka laying people off, you may significantly reduce expenses but it now harder to get your product on market in time for it to make a significant effect.
Hell if you do not execute due to low cash flow you may not invest in the proper markets at the right time. Dirk Meyer (AMD CEO from 2008 to 2011) was let go for he focused on two of three markets.
- He put most of his R&D in big cores (what became Bulldozer/Piledriver/Kaverai) trying to maintain and grow the server market/desktop cpus.
- He put some R&D in small cores (what became Bobcat/Jaguar).
- He ignored the mobile aka cellphone/tablet market, in fact selling AMD low powered graphics (ADRENO is anagram of RADEON) to Qualcomm, he also sold Xilleon to Broadcom. These sell offs generated very little money but Problem A needed to be address in any way possible, remember this was the time of the Market Crash of 08.
In hindsight we know this was a very bad move. AMD should have been putting all of efforts in its small cores, sustain its big cores temporary with a derivative of the phenom k10 architecture, and figure out how to make some money on mobile without going all in.
I think AMD is stable for now, but it is going to be a lot smaller company for the technology world is getting bigger, more fish are entering the pond, and I just do see how AMD grows.
Facebook
Twitter