AMD Q3 results: even worse than revised expectations

[Dman8777]

Poor results this quarter shouldn't surprise anyone. The entire PC industry took a huge hit last quarter and this quarter. All companies have had to reduce their forcasts. These days it's the mobile sector that's growing and that's where nvidias strategy with some mobile procs will probably help them.

 

[Red Hawk]

Even if this isn't too surprising, it's still bad news for AMD in particular, as they're already in a sort of precarious situation.

 

[Soccerman06]

Even if amd goes under, I see ATI being brough back from the dead by some major player, Apple has the cash to take the risk why not?

 

[badb0y]

Even if amd goes under, I see ATI being brough back from the dead by some major player, Apple has the cash to take the risk why not?

Not enough profit

 

[ocre]

An analysis of the situation: http://seekingalpha.com/article/919691-advanced-micro-devices-warns-on-weak-demand-what-s-next

Company will not be profitable, it seems, this quarter. Full year will likely see a massive hit if Q4 is equally bad.

This was a good read. I found this part particularly interesting and thought i might bring it into focus

Q4 Guide - Unlikely To Be Good
With the company writing down $100M of inventory, it is unlikely that the Q4 guide will be particularly strong. On the previous call, the company had assured investors that the majority of the new inventory that had been built up was next generation "Trinity" products and not, as feared, the previous generation "Llano" products. However, the inventory that had already been built -- especially on the desktop chip side -- remained.
AMD attempted to hold off the coming of the next generation "Trinity" parts on the desktop in order to clear inventories, but it seems that the company was unable to do so. A part of this is likely due to the fact that AMD had created something of an "Osborne Effect" by talking up its upcoming products while its new products had just hit the shelves. This likely had a material effect on the demand for its current products, as AMD created the perception that better stuff was perpetually "just around the corner."

Its a sad fact it happened but there are lessons too be learned. We keep hearing how "nvidia is late" on these forums but if you havent figured it out just yet there is probably a lot more to it. Although a few people will not want to agree, there is reasons to hold off launching products sometimes especially when there are boat loads of previous generation stock in the warehouses. As a company you want to prevent having to write off a lot of stock as its just throwing away money. Amd had to write off a lot and it really hurt them. There are better ways to do things.

Its not far fetched to connect that perhaps nvidia had reasons to hold off launching some of their 28nm GPU skews. To clear out as much inventory as possible. The perfect timing for the holiday seasons is an indicator these gpus were held back as long as possible. Also many are from the same silicon as the 670/680, the gk104. Call nvidia what you may, call them late or whatever but they know what they are doing and how to make money.

I dont believe the 680 was held back to clear stock. I honestly believe nvidia wasnt sure what to do untile they seen what AMDs hand looked like. Then they prepped the 680 and launched. But there was plenty of 40nm chips in the pipeline than nvidia needed to get rid off. I believe this would give them reasons to take their time lauching their other skews.

As far as AMD. I think they expected nvidia not to be able to compete and tried to capitalize on this. They dropped their 28nm line-up early to try to take advantage of what they thought would be a great opportunity. Having many older generation cards in the pipeline didnt matter too them because they planned to offset this with their premium. The plan all went a bust and they got stuck with a bad outcome. They waited as long as they could to drop prices because they really couldnt afford too. With older products on the shelves and no way to get that money back, they have a huge loss to take. The bullet to bite. The plan backfired.

AMD was first to have the full 28nm lineup out in the market but theu failed to turn it into profits. You cannot leave so many of your last gen cards out that your burning the candle at both ends. This is why their newer 28nm cards were less of a value than their 40nm cards. You could get faster 40nm AMD cards for cheaper than their 28nm cards. Having so much stock left in the pipeline really can hurt. There are better ways to do things.

In my opinion these things should be considered. There is no doubt in my mind this is what occurred, at least to a degree. It is my opinion and may not matter to some of you but i have the right to state it.

I am just saying that there are a lot of things you may not get but you can bet there is a reason. Like how AMD gets their line up out first but dont make much of a profit on it. Stuff like, why nvidia can succeed while being sooo late. Just because you cant see it doesnt mean that there isnt more to it. Hopefully some will put more thought into things before they start mindlessly saying stuff like, "nvidia is late, whats the point in this card?" bla bla bla. The point is that nvidia will release cards when they think its time, and they will make money on them. They want to stay in business.

This is unfortunate for AMD but a lot of things people my have been praising them for could have contributed. The massive write offs of at least 100million $$ were all from older stocks of products that they did not sell.

 

[Crap Daddy]

"One of the big disappointments in AMD’s pre-announcement was the fact that, in addition to weaker-than-expected demand, the company pointed to lower average sales prices in its computing solutions business. The lower ASPs may be evidence that the company was cutting prices in an effort to get rid of chip inventories that are building up — or a sign that it is simply losing its power to command good pricing in the market."

 

[3DVagabond]

You do realize they are talking about CPU's? This has nothing to do with when they released there SI lineup or old GPU inventory. It definitely has nothing to do with what nVidia being late to market with Kepler. Just like nothing AMD did had nothing to do with GK100 being canceled, as some have tried to postulate.

It's the Bulldozer architecture that's hurting them.

Q4 Guide - Unlikely To Be Good
With the company writing down $100M of inventory, it is unlikely that the Q4 guide will be particularly strong. On the previous call, the company had assured investors that the majority of the new inventory that had been built up was next generation "Trinity" products and not, as feared, the previous generation "Llano" products. However, the inventory that had already been built -- especially on the desktop chip side -- remained.
AMD attempted to hold off the coming of the next generation "Trinity" parts on the desktop in order to clear inventories, but it seems that the company was unable to do so. A part of this is likely due to the fact that AMD had created something of an "Osborne Effect" by talking up its upcoming products while its new products had just hit the shelves. This likely had a material effect on the demand for its current products, as AMD created the perception that better stuff was perpetually "just around the corner."

While I know there are some people who really get all amped up thinking that it's nVidia kicking AMD's butt, it's not.

 

[sontin]

Sure nVidia is kicking AMD's butt. They got nearly the whole Low-End and Mid-Range Notebook sector with GK107. And in the high end they are competing very easily with GK104 against Pitcairn.

In the desktop market they forced AMD to lower their prices 5-6 times in the last 6 months. Besides a few marketing guys cutting prices over and over again is hurting the trust of the market in the products.

The GPU business is not growing. That's one of the main problem of AMD. If they loosing ground to nVidia than it will hurt the whole company.

 

[3DVagabond]

Sure nVidia is kicking AMD's butt. They got nearly the whole Low-End and Mid-Range Notebook sector with GK107. And in the high end they are competing very easily with GK104 against Pitcairn.

In the desktop market they forced AMD to lower their prices 5-6 times in the last 6 months. Besides a few marketing guys cutting prices over and over again is hurting the trust of the market in the products.

The GPU business is not growing. That's one of the main problem of AMD. If they loosing ground to nVidia than it will hurt the whole company.

Of course they are. It's all nVidia and what they are doing to AMD's GPU business. It has nothing to do with AMD not being at all competitive with Intel in what is AMD's main business. It's the Messiah Jensen that's responsible. He waited 8 months before releasing midrange Kepler just so he could get AMD exactly where he wanted them, then he struck. He struck so hard the reaction went back in time and effected AMD's 3rd quarter earnings. The man is divine he's so awesome.

 

[Keysplayr]

Yahoo ticker not looking to bright:

Like a roller coaster that only goes down for the past six months.

 

[Jaydip]

What AMD need now is a kick ass CPU to turn this around.They should try to compete for the absolute performance as well not just on the price/performance.They also need a new strategy for tablets.

 

[Keysplayr]

They truly need something really positive. Far, far too many negative hits over the last few years. They really can't take any more. I don't know how they would come up with a kick ass CPU without any money to make one. Abu Dhabi might infuse them with another few billion dollars perhaps?

 

[BenSkywalker]

They truly need something really positive. Far, far too many negative hits over the last few years. They really can't take any more. I don't know how they would come up with a kick ass CPU without any money to make one. Abu Dhabi might infuse them with another few billion dollars perhaps?

Apple, Samsung or Google may buy them for their IP so they can sue people. In the grand scheme of things, pretty cheap if they just lay everyone off and cease all operations. Their IP, sadly, is worth *far* more then the actual company at this point to those who have been dragged into the patent wars by Apple.

Really hope it doesn't come close to that, but they actually have a rather extensive IP portfolio and the cost to acquire them is in the realm of 'a good month' for the IP vultures in terms of profits needed to do so. Perhaps that is the approach they should use, shop some IP around to companies to generate some revenue so they can get back into the game.

We also don't know how long they have to deal with non compete clauses in the ARM market. The sale of SnapDragon for $65 Million to Qualcomm has to be the dumbest tech business move this century.

 

[Dribble]

They've been on deaths door for many years now - they were going to go bust years ago (in the top 20 companies most likely to go under list) but the payout from Intel gave them some breathing space.

Before then I suspect selling the fabs was another thing they didn't want to do but had no choice if they wanted to survive.

Now I suspect AMD will need to sell Ati for a billion or so to give them another chance.

 

[KompuKare]

We also don't know how long they have to deal with non compete clauses in the ARM market. The sale of SnapDragon for $65 Million to Qualcomm has to be the dumbest tech business move this century.

+1. That plus with hindsight the whole ATI buyout. Billions in dept and then not having enough left over to invest into Fusion - I mean Intel iGPU isn't Fusion but in some ways SB is more integrated than Llano and it was first. AMD had truly amazingly bad execution on Fusion.

Of course if AMD had pushed for 65nm when they were riding high instead of buying ATI their CPU business should have been far better condition and ATI would have been better off on their own.

 

[railven]

I wonder if the US Government will bail em out and rename it American Micro Devices. Haha.

I do hope Apple doesn't get the ATI Patent folder, hopefully Intel can pull some strings and pump some of that life support money into AMD in exchange.

 

[cplusplus]

I know that they're supposed to have the contract to put the CPU and GPU into the next Xbox and Playstation, but what happens if they don't make it that long? Are the parts already decided (Steamroller and Southern Islands) and another company will build them? Do the contracts get put back up and the consoles delayed until 2014?

 

[badb0y]

I know that they're supposed to have the contract to put the CPU and GPU into the next Xbox and Playstation, but what happens if they don't make it that long? Are the parts already decided (Steamroller and Southern Islands) and another company will build them? Do the contracts get put back up and the consoles delayed until 2014?

I am pretty sure those are just rumors.

 

[railven]

I know that they're supposed to have the contract to put the CPU and GPU into the next Xbox and Playstation, but what happens if they don't make it that long? Are the parts already decided (Steamroller and Southern Islands) and another company will build them? Do the contracts get put back up and the consoles delayed until 2014?

I'll assume it is similar to previous console contracts where ATI just made the chip design, but the console makers produces the chips themselves based on the ATI designs. If the contracts are all finalized and the designs exchanged, even if AMD goes bankrupt I'm sure the console vendors will continue to make the chips without issue.

 

[hyrule4927]

Edit: Nevermind, misread something

 

[-Slacker-]

Doooooooooooooooooooooom!!!!!!!!!!1111

 

[Keysplayr]

Doooooooooooooooooooooom!!!!!!!!!!1111

If you don't think AMD is in some serious Jelly, I'd like to know why.

 

[Hypertag]

http://news.cnet.com/8301-10805_3-5...ffs-that-could-hit-30-percent-of-its-workers/

 

[blastingcap]

If you don't think AMD is in some serious Jelly, I'd like to know why.

AMD is in danger of drowning in the crocodile tears shed by some of the posters this thread.

But seriously, if you are a noninvested gamer looking for good price/perf in the future--which is often driven by competition--you should pray that AMD makes it through this bad period.

Edit to add:

http://news.cnet.com/8301-10805_3-5...ffs-that-could-hit-30-percent-of-its-workers/

http://semiaccurate.com/2012/10/12/amds-layoffs-target-engineering/

 

[NIGELG]

But seriously, if you are a noninvested gamer looking for good price/perf in the future--which is often driven by competition--you should pray that AMD makes it through this bad period.

/

Yes....emphasis on 'noninvested'.