It's only a matter of time before AMD files for bankruptcy. If shareholders get anything out of it, it won't be much.
Uh oh, you've triggered the obligatory IDC "value trap" post
Don't invest or buy something just because it is cheap now compared to its price at prior times in history.
A moldy orange will always be cheaper than a not-quite-ripe orange in the grocery store, for a good reason, and no matter how inexpensive that moldy orange becomes it will still be a nasty foul orange in ever advancing stages of decay.
I think that is what Rory is now attempting. The problem being, of course, that you cannot get back to the basics and still have just those basics generating enough revenue to pay all the bills that 10,000 employees create.
Via survived because it wasn't a 10,000 employee company attempting to live off of bread crumbs. They made sure their cost structure was small enough that they could survive in their niche, focusing on one or two of the basics.
The challenge with AMD is that it is just so large in terms of headcount that it is nearing the point of no return in terms of making seismic shifts in corporate strategy without totally gutting the workforce in the process of getting to the promised land of wherever they think they can go to make profits with niche products.
If there are two lessons I could say that I learned in my life trailing the very hard way those would be:
- Never, never, ever work in a company you don't believe.
- Never, never, ever work with management you cannot trust
I don't believe in AMD and even less in AMD management, so the answer is no, no matter how much they would offer me.
I also don't think I would be the top priority for AMD right now. They don't need financial expertise much less BPM expertise, they need engineers that could give a clear direction for the company and they need a BoD that would cut the guts out of the management positions and bulldoze everything in the way to make this vision work.
A clear goal, a clear roadmap and management doing everything it could to make it happen.
Not every decision in your life is taken considering your career first. Those guys have family, friends and other ties to the places they live, others for the projects they are working, it isn't simply "OMG AMD is going under, I have to look for a job in Santa Clara".
Some of the new entrants just see AMD as a trampoline to another tech company, others have AMD as their only choice.... It's hard to tell.
IIRC that site Glasssomething, almost everybody there gives high notes to AMD compensation, so money is a factor too.
You better be a lot more imaginative if you want to play in the financial markets.
Companies can go bankrupt or liquidate sending the stock value to 0.00, stock can go to the pennies due to bad business decisions and never lift up again, the company can dilute their stock and you either bring a lot of money or is out, a lot of convertible debt can be converted in equity further diluting the stock value... There are a lot of ways to lose money with a cheap stock, don't fool yourself thinking it can't go any lower. Not even the most amateur broker would say that to you.
Not only that, they don't have those two products ready, so nobody really knows how well they will fare on the market.
LOL. Yeaa it look like they want to sit everywhere on the deck, and at the same time are having a discussion of what technology they should use to manufacture the chairs. They are probably looking for some elegant engineering solution to the chair problem.
ShintaiDK
Lifer
- Apr 22, 2012
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People said the same at 20$, 10$, 8$, 5$, 3$, 2$. And the fools kept losing their money. Now the stock is 1.8$ and still dropping without any hope of recovery ahead.
Plus stockowners are the first ones to lose everything.
Lookup value trap.
frozentundra123456
Lifer
- Aug 11, 2008
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You have a point about the "value trap", although some investors have made a fortune purchasing undervalued stocks. (See Warren Buffet). The thing is though, they tried to purchase "undervalued" stocks that had solid fundamentals, which obviously AMD does not have, i.e. an inferior product in a flat or declining market, and too much debt.
Still, if one wanted to speculate, at the price AMD is now, if it can survive, I would think it would reach 8-10 dollars at some point.
Not saying AMD is in any way comparable to Apple, but one might have called Apple a "value trap" when it was in freefall some years ago too, but look where it is now. The difference is they had a visionary leader (whether you liked him or not), and came out with an innovative product.
ShintaiDK
Lifer
- Apr 22, 2012
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8-10$? Where is that value again? 8-10$ would require a huge growth and a huge raise in ASP.
What makes a declining stock a bargain is when the reasoning for its decline is attributable to something that is assured to be a short-term effect.
Stocks that are seasonal for instance, because the underlying demand for their products is cyclical, can be bargains when investors dump them to move money elsewhere in the short-term because they know that in the short-term the stock itself is going to underperform because of fundamentals. Then they move the money back into the stock once they know the cyclical low has passed.
But investing in a stock just because it is low in price is not really investing, it is speculating that you know something the rest of the world doesn't. Because if the rest of world thought AMD was going to go to $6 or $8 then it would be under buying pressure and you'd see the price rise to those levels, the fact it isn't is what tells you that the rest of the world actually knows something that you don't know - and that is not the time to fancy yourself to be a buyer.
AMD is low in value because the market is marking-to-market the expectation that AMD's current decision makers are going to continue to make the very sort of decisions they have been making which has resulted in AMD's current fiscal situation. That is why the stock popped when the market thought it learned something new - that it might be bought and put under new management.
Existing management claiming it has a new vision and a new strategy is not confidence building because those same people claimed to have a new vision and a new strategy every year for the past 7 yrs and it has been a perpetual disaster train.
New management = new vision and new strategy from people who have a history of having good vision and good strategy.
This makes AMD stock the very definition of a value-trap.
I can see why a lot of people would want to jump on AMD's stock. If you look at its price history, it has gone this low before and then it jumped way up over time.
Also, with them having a market cap of $1.3 billion now it makes them look very cheap considering the fact that they paid over $5 billion for ATi alone several years ago.
I realize that they have $2 billion in debt, but even with that included they are cheaper than only ATi was worth some time ago.
Also, with them having a market cap of $1.3 billion now it makes them look very cheap considering the fact that they paid over $5 billion for ATi alone several years ago.
I realize that they have $2 billion in debt, but even with that included they are cheaper than only ATi was worth some time ago.
AMD overpaid ATI to the point that they had to take charges against their goodwill account, and goodwill per se means overpaid acquisitions.
ShintaiDK
Lifer
- Apr 22, 2012
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Classic mistake.
I doubt ATI today is worth over 500mio, even on a good day. Also you forgot how much they sold out of ATI as well already. And ATI seems to die just as fast as the CPU business now. Revenue is only one way, down.
Plus AMD overpaid massively for ATI even back then.
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why would anyone invest cash or buy AMD ? they ran deficits after deficits year after years for the past 10 years. Basically investing cash in this company would result in a loss for sure again.
that being said, i'd love AMD to survive but i do not see how. They have to make this company profitable before anything else. without profits it's impossible to survive.
that being said, i'd love AMD to survive but i do not see how. They have to make this company profitable before anything else. without profits it's impossible to survive.
low historic prices means absolutely nothing right now, in 2008 it was a massive stock markets sell-off. Right now, it's only AMD fault if the stock trades below 2$. If nothing is done soon, it will just go bankrupt, so my advice is, if you wanna play this stock, short it (not sure if you can) or buy puts (options, when the stock price goes down you make cash)
People keep saying AMD is going bankrupt but I'm sure that they have options to avoid that, such as selling their intellectual property, or laying off most of their workforce while continuing to sell products for profit.
A small team of their best engineers. That's all it took for Intel to bounce back from the P4.
As if the Haifa team didn't benefit from the work from the P4 team. Chipset, interfaces, and all the other support activities such as testing, validation, sales, all they could get from other Intel divisions without too much trouble.
Uh, you think it was a "small team" that developed Conroe?
It takes a small team to develop the Via Nano or a TI-86 calculator chip.
It takes a medium team (1700) to develop something like TI's ARM-based OMAP, Nvidia's Denver, Intel Atom or AMD Jaguar.
It takes a large team (3000-5000) to develop something like AMD's Steamroller or Intel's Haswell.
There is a reason practically every other company that has an x86 license opted to drop out of that rat-race long ago.
It takes a serious financial and headcount commitment, over a prolonged time period of at least 4 yrs, to come up with a complex modern IC for today's advanced process nodes and the complexity/expense is not going down anytime soon.
Well at the very least, they should not have large teams of engineers working on Piledriver or Steamroller. Bulldozer should have been fully scrapped. They could have stuck with Llano cores for the time being.
Their management is completely inept. They might as well start cutting from the top down and just keep their most talented engineers.
In any event, it was a smaller team that developed Conroe in comparison to the division that created the P4.
If it only requires a medium sized team to develop an advanced ARM core, perhaps they should go that route for the time being.
The problem is that history shows us businesses do not gracefully shrink in size in accordance with their diminishing revenue in the wake of bad management.
These things tend to just dive and keep on diving once the psychological ramifications are set in motion in terms of employee morale. That and the fact that bad management is simply never held accountable in a manner which would prevent further bad management from transpiring.
Poor managers are just moved around the company, never really fired or called on their track records. It is a form of corporate welfare, I haven't worked for or with a company yet that didn't have this in one form or another.
Heck just look at Hector Ruiz, he was Motorola's president of semiconductor manufacturing, rode that puppy into the ground to the point that Moto had no choice but to spinoff their fabs to form freescale...Ruiz's reward for such mismanagement was he got to become CEO of AMD only to then go and do the same to AMD, mismanaging it to the point they had to spin off their fabs as well.
The problem, THE problem, for AMD right now is that no matter what direction they want to go right now it is a 4 year timeline before they can see fruits from their labor. They don't have enough cash to weather four more years of losses.
It is past go-time, which is why their stock reflects an expectation of them becoming insolvent.
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