"AMD Moves Away From PCs Amid Steep Losses"

[Abwx]

Excuse me? Since when refinance, which is to issue new debt, means dilute capital? What does debt has to with shareholder capital?

The cost of supplementary debt would be too high.

Loan interests are a direct function of the estimated risk ,
wich is very high for AMD.
Why would someone buy what WS call junk bonds unless
the interest rate is almost double digit ?...

The only route is capital dilution that has the advantage
of not generating interests payements , but given the current
market capitalisation any increase in capital would be ruining
for current stockholders.

I was asking what would constitute a balanced ratio to you. Would be X% share of gross revenues or operating profits? Are you comparing AMD with Nvidia, Intel, Qualcomm or TI? Is there a golden rule for SG&A vs R&D? I really want to know why AMD rations could be called "suicidal".

At Nvidia the adm/marketing is 1/3 of the salaries cost ,
so Rory Read is adjusting AMD s ratio with this one , wich will
induce a further 20% cut in adm/marketing personal , not enough
to fill his 15% global target so he will surely reduce the engeenering side ,
although to a lesser extent.

http://phx.corporate-ir.net/phoenix.zhtml?c=116466&p=irol-IRHome

 

[Idontcare]

Xbitlabs: Financial Analysts Consider AMD “Un-Investable”, Start to Lose Hope.

“We have no further confidence that any aspect of our prior structural thesis (margin accretion, cash flow, and balance sheet deleveraging) will play out in the foreseeable future. Indeed, we now see the prospect for structurally lower margins, as well as cash burn [...]. Frankly, the most common adjective that comes up when we discuss the company with clients is, simply, ‘un-investable’. We are now believers,” said Stacy Rasgon, an analyst with Bernstein Research, reports Tech Trader Daily.

“We now have less confidence in go-forward cash burn given rapidly declining ASPs and management’s new refusal to provide gross margin guidance. Thus, we worry about the magnitude of intended pricing cuts and gross margin impacts as AMD’s cash bleed could intensify. […] Further, management’s ongoing misexecution in our opinion seems to be contributing too (building too much inventory, firing top operational managers, channel misalignment, withdrawing from broad swaths of the market). Finally, the firm announced 15% head-count reductions, which will make it more difficult to engineer and sell competitive products,” wrote Craig Berger, an analyst with FBR Capital, in a note to clients.

 

[frozentundra123456]

Why would it? Vishera is selling for a few bucks more than Bulldozer chips it replaced and we are talking about current prices. In fact, Bulldozer had an initial MSRP 20% above Vishera initial MSRP.

True, but for Trinity and Piledriver, they at least got the product out on time and it was an improvement over what it replaced, not the disaster that was Bulldozer. Mainly though, I just think the stock is way oversold. I would think enough people would want try to take advantage of that to cause an upward move at least temporarily.

 

[frozentundra123456]

Xbitlabs: Financial Analysts Consider AMD “Un-Investable”, Start to Lose Hope.

Reminds me of the time in the eighties when my broker said Mobil oil still had "significant downside risk" and discouraged me from buying it. It went straight up from there.

I am not saying AMD is not a deeply troubled company. And personally since the only thing I do that is cpu intensive is gaming, I would not consider an AMD chip in a desktop. I am just taking the contrarian view that when everyone is negative might be a time to buy. But you would have to be prepared to lose everything if they go bankrupt for the possibility of doubling or tripling your money under a best case scenario.

The thing is, they have managed to struggle along for many years making only a small profit or a loss. Somehow I think they will continue this way, and the stock could make a nice move if somehow they could turn a profit for a couple of quarters.

 

[mrmt]

The only route is capital dilution that has the advantage of not generating interests payements , but given the current
market capitalisation any increase in capital would be ruining for current stockholders.

Works the other way too. Initial capital base is so low that it wouldn't be a problem for existing shareholders to bring money to not have their share diluted.

But yes, debt won't be cheap for AMD for the reasons you listed. As always the rating agencies are behind the curbe, but once AMD goes to lower than B ratings, we are to see another plunge in the stock.

At Nvidia the adm/marketing is 1/3 of the salaries cost,so Rory Read is adjusting AMD s ratio with this one , wich will
induce a further 20% cut in adm/marketing personal , not enough to fill his 15% global target so he will surely reduce the engeenering side, although to a lesser extent[/URL]

I guessed that you would bring Nvidia as they have one of the smallers SG&A/Revenues of the market or better SG&A vs R&D rate of the market, better than Intel or Qualcomm for that matter, but there are some caveats too.

AMD is spread across tons of sites, and this is where a consolidation would help SG&A, but there will be a limit for that. AMD is very peculiar to the fact that they need to manage not only but two VERY distinct products lines beyond the traditional division of CPU/GPU, so they need to manage two foundries, two logistical chains, two marketing departments for both product lines with all its sub-lines, etc.

I'm not sure if their cross patent agreement helps them to save some R&D too but I'm inclined to think it does, because AMD does not need to create a a lot of things, just copy what Intel is doing. This free lunch helps them to spend less R&D for the research level they have.

Also keep in mind that whatever low fruits were hanging at AMD they are long gone. There isn't such thing as a CEO that does not like to fire idle people at the beginning at his term,

So yes, while AMD has a worse ratio than Nvidia I don't think it is exclusively because the company is bloated. AMD has some peculiarities that make large SG&A almost mandatory.

 

[mrmt]

True, but for Trinity and Piledriver, they at least got the product out on time and it was an improvement over what it replaced, not the disaster that was Bulldozer. Mainly though, I just think the stock is way oversold. I would think enough people would want try to take advantage of that to cause an upward move at least temporarily.

Market doesn't care if it was improvement or not, market cares if Vishera will bring money for AMD, and it won't bring more money than Bulldozer, it will bring less.

Vishera is already starting at a sub-200USD MSRP while Bulldozer started at 250USD and it does not bring gains in die size, so unless yields improve by a *great* margins, which I don't think it did as Bulldozer didn't have the kind of availability problem that some Nvidia chips had, we get by default a worse chip than we had last year. That's involution, not evolution.

 

[piesquared]

Who is SeaMicro?

 

[mrmt]

Reminds me of the time in the eighties when my broker said Mobil oil still had "significant downside risk" and discouraged me from buying it. It went straight up from there

Your broker was probably very young at the time. He probably missed the high prices of the 70's or at least could not grasp the geopolitical reasons for the oil market glut at the 80's.

In any case, what he should have pointed to you was a significant downside risk for *your money* by investing in Mobil, which made sense in a very short term view, but there was no question about the Mobil' survival. In case you haven't noticed every article out there about AMD is questioning the very future of the company, which is a very different situation.

 

[frozentundra123456]

Your broker was probably very young at the time. He probably missed the high prices of the 70's or at least could not grasp the geopolitical reasons for the oil market glut at the 80's.

In any case, what he should have pointed to you was a significant downside risk for *your money* by investing in Mobil, which made sense in a very short term view, but there was no question about the Mobil' survival. In case you haven't noticed every article out there about AMD is questioning the very future of the company, which is a very different situation.

All I was really trying to say, in a somewhat humerous way, was that analysts can be mistaken and that markets tend to swing too far on both the upside and downside. If amd manages to survive, and their HSA initiative takes off or they have a hit in the mobile market, the stock could go up.

 

[Idontcare]

All I was really trying to say, in a somewhat numerous way, was that analysts can be mistaken and that markets tend to swing too far on both the upside and downside. If amd manages to survive, and their HSA initiative takes off or they have a hit in the mobile market, the stock could go up.

Broker's are not fortune tellers, and of course an unforeseen reversal of fortunes can happen at the last minute to save a company.

But good lord man, that does not make for a sound investment strategy.

You want a broker that can comprehend the financials, understand the market fundamentals, get a read on the buy/sell momentum on the street, and project whether the stock price can be reasonably expected to rise or fall.

You do not want a broker who comes to you and says "I can't think of any good reason why the stock price can't have reversal of fortunes, the company may discover gold in its parking lot, so I can't tell you to not buy the stock because it could go up from here for any number of implausible scenarios". That is not advice, that is confirmation bias.

Going by your example I'm confident you remember DEC, sound technology (a leader in fact, alpha was second to nothing), and yet they managed to implode and drive that company into the ground.

SUN was headed the same way, only Oracle came along and snapped them up before they had to file for Chapter 11.

I don't want the broker who guides me to invest in broken companies because he/she thinks they can call the bottom on the falling stock price. I want the seasoned broker who understands what a value-trap is and knows enough to steer clear of them, that the easy-money game doesn't work for a reason.

Companies, and even sectors, can be doomed, because of situations such as the inability to survive competition, the inability to generate substantial and consistent profits, the lack of new products or earnings growth, or ineffective management. Often, a value trap appears to be such a good deal that investors become confused when the stock fails to perform. As with any investment decision, thorough research and evaluation is recommended before investing in any company that appears cheap when reviewing its relevant performance metrics.

HSA may well take off, but HSA is not dependent on AMD. HSA can take off and be the next best thing since sliced bread, all while AMD goes bankrupt.

 

[pelov]

HSA may well take off, but HSA is not dependent on AMD. HSA can take off and be the next best thing since sliced bread, all while AMD goes bankrupt.

Considering how embracing ARM and Apple have been towards HSA, I'd give AMD's baby more chance to succeed than AMD itself.

 

[frozentundra123456]

Broker's are not fortune tellers, and of course an unforeseen reversal of fortunes can happen at the last minute to save a company.

But good lord man, that does not make for a sound investment strategy.

You want a broker that can comprehend the financials, understand the market fundamentals, get a read on the buy/sell momentum on the street, and project whether the stock price can be reasonably expected to rise or fall.

You do not want a broker who comes to you and says "I can't think of any good reason why the stock price can't have reversal of fortunes, the company may discover gold in its parking lot, so I can't tell you to not buy the stock because it could go up from here for any number of implausible scenarios". That is not advice, that is confirmation bias.

Going by your example I'm confident you remember DEC, sound technology (a leader in fact, alpha was second to nothing), and yet they managed to implode and drive that company into the ground.

SUN was headed the same way, only Oracle came along and snapped them up before they had to file for Chapter 11.

I don't want the broker who guides me to invest in broken companies because he/she thinks they can call the bottom on the falling stock price. I want the seasoned broker who understands what a value-trap is and knows enough to steer clear of them, that the easy-money game doesn't work for a reason.


HSA may well take off, but HSA is not dependent on AMD. HSA can take off and be the next best thing since sliced bread, all while AMD goes bankrupt.

I am retired and not really in the market now. That was just an example from a long time ago. But you can bet I would have changed brokers.

All I am saying is that if AMD survives there might be a window when it could reach 5-10 dollars. I am not saying it is a sound investment. It definitely is not. But if one had money to "play with" that you could afford to lose, you might make some money on it.

 

[NTMBK]

I want the seasoned broker who understands what a value-trap is and knows enough to steer clear of them, that the easy-money game doesn't work for a reason.

The amount of times you've deployed that link lately, Investopedia should be paying you a commission Do you just have that URL Ctrl+C'd at all times?

(Not that it's not valid advice, I've just seen that link a lot!)

 

[Ajay]

Financial_Analysts_Consider_AMD_Un_Investable_Start_to_Lose_Hope

 

[Olikan]

http://www.xbitlabs.com/news/cpu/di...mportant_Strategy_Announcement_Next_Week.html

It is interesting to note that AMD invited a mysterious guest to the press conference, but not its chief technology officer (CTO) Mark Papermaster, who has worked on the strategy for several quarters already. Potentially, the special guest might be a strategic partner of AMD, who will play a critical role in the execution of the ambidextrous strategy.

WTF?

AMD is producing GPUs to ARM ...you heard here first

 

[Idontcare]

The amount of times you've deployed that link lately, Investopedia should be paying you a commission Do you just have that URL Ctrl+C'd at all times?

(Not that it's not valid advice, I've just seen that link a lot!)

I was bitch-slapped, hard, and on multiple occasions by the markets in falling for the value-trap without realizing that was what I was doing.

Once I came to be aware of the fallacy, and understood from experience how easy it is for one to convince themselves they have a real under-valued bargain in their scope, I decided to do what I can to help others avoid learning that lesson the way I learned that lesson.

But you can see it here in the forums. Everytime AMD has dropped by a buck in the past 6 months there is someone who jumps in and says "it is so undervalued, it is insane that it could drop any lower, better get in now before it pops!".

Now you look at that chart above and tell me what kind of near-perfect linear trend it has made since March of this year. There is no bottom building in this thing yet, no support levels to speak of. ($4 was a support level but it only held for some 2 weeks of low-volume summer trading)

This is a stock that will perpetually look like an undervalued stock, except nothing about it suggests a bottom is being put in. The market is very much pricing in total liquidation as the end-point for the company and the trade momentum that has been consistently playing out for the past 6 months speaks to that.

 

[Ajay]

I was bitch-slapped, hard, and on multiple occasions by the markets in falling for the value-trap without realizing that was what I was doing.

Once I came to be aware of the fallacy, and understood from experience how easy it is for one to convince themselves they have a real under-valued bargain in their scope, I decided to do what I can to help others avoid learning that lesson the way I learned that lesson.

But you can see it here in the forums. Everytime AMD has dropped by a buck in the past 6 months there is someone who jumps in and says "it is so undervalued, it is insane that it could drop any lower, better get in now before it pops!".

Now you look at that chart above and tell me what kind of near-perfect linear trend it has made since March of this year. There is no bottom building in this thing yet, no support levels to speak of. ($4 was a support level but it only held for some 2 weeks of low-volume summer trading)

This is a stock that will perpetually look like an undervalued stock, except nothing about it suggests a bottom is being put in. The market is very much pricing in total liquidation as the end-point for the company and the trade momentum that has been consistently playing out for the past 6 months speaks to that.

Thanks for that clear explanation. I too was bitch slapped on a 'value' stock that cost me $3K. It was enough to wake me up without being too much and scaring me out of the market forever. If it had been $30K, I probably would have decided I was a freaking idiot an never gone near the market again (except for matching 401Ks).

 

[sontin]

http://www.xbitlabs.com/news/cpu/di...mportant_Strategy_Announcement_Next_Week.html

WTF?

AMD is producing GPUs to ARM ...you heard here first

What happened to "Project Win"? :hmm:

 

[ShintaiDK]

What happened to "Project Win"? :hmm:

It was only "project win" for the CEOs pension and golden parachute.

 

[MaxPayne63]

Thanks for that clear explanation. I too was bitch slapped on a 'value' stock that cost me $3K. It was enough to wake me up without being too much and scaring me out of the market forever. If it had been $30K, I probably would have decided I was a freaking idiot an never gone near the market again (except for matching 401Ks).

The value trap is especially dangerous in the case of AMD because of the tendency people have to overestimate the strength of companies that make products they like or are otherwise emotionally attached to.

 

[Olikan]

The value trap is especially dangerous in the case of AMD because of the tendency people have to overestimate the strength of companies that make products they like or are otherwise emotionally attached to.

this remembers me facebook

 

[Rvenger]

It was only "project win" for the CEOs pension and golden parachute.

Sad but probably true.