AMD price drops

[Phynaz]

AMD dropped CPU pricing up to 19% today.

http://techreport.com/news/24744/amd-trims-a-series-fx-series-processor-prices

 

[Cerb]

Very nice for the 6300 and 5600. OTOH, how good/bad/indifferent is this for AMD?

 

[SiliconWars]

AMD stock up +14% today. http://www.marketwatch.com/investing/stock/amd

 

[erunion]

wow. Those are some big cuts.

 

[mrmt]

Very nice for the 6300 and 5600. OTOH, how good/bad/indifferent is this for AMD?

Indifferent I guess. Every dollar less in ASP correspond to less 2% in gross margins, but those are old chips by any standards, yields should be somehow better than in the time of launch.

What remains to be seen is whether AMD will be able to sell chips at all when Haswell arrives, but we'll have a clear idea only by the end of Q3.

 

[Cerb]

That's kind of what has me wondering. In servers, FI, they basically can't give Opterons away, except to a small handful of specialized users. If that happens with desktops, and Intel keeps making better mobile CPUs...

 

[mrmt]

That's kind of what has me wondering. In servers, FI, they basically can't give Opterons away, except to a small handful of specialized users. If that happens with desktops, and Intel keeps making better mobile CPUs...

In Q312 this is exactly what happenned: AMD choked with inventory to the point it had to ask GLF to not manufacture chips for them for an entire quarter.

When you look at their inventory levels in Q113, they have an inventory level below Q212 and Q312 marks, but far above Q112 when their revenues were 30% bigger. When you are facing a 30% slump like AMD, probably over 50% if we account only for their big core GLF line up, you will do everything you can to reduce inventory because you need to reduce working capital, not employ more capital.

If I were to guess, I'd say that Brazos and Kabini are making a healthy margins and money for AMD and that their graphics business is showing streght, but they are operating below their projections in the big core line. Lose a few points in gross margins (if any) but ship an amount closer to the target volume needed to not trigger another take-or-pay charge is what they should be trying to do. In any case, it's easier to sell anything now than in Q3/Q4, when i3/Pentium Haswell will be shipping for OEMs.

 

[Phynaz]

AMD stock up +14% today. http://www.marketwatch.com/investing/stock/amd

Which has nothing to do with the price cuts. The cuts were announced this morning while the stock pop was in the last two hours of trading.