AMD Reports Fourth Quarter and Annual Results

[Idontcare]

In the fourth quarter of 2008, AMD reported a net loss of $1.424 billion, or $2.34 per share. For continuing operations, fourth quarter 2008 loss was $1.414 billion, or $2.32 per share, and the operating loss was $1.274 billion.

The results for continuing operations include an unfavorable impact of $996 million, or $1.64 per share as described in the table below. Loss from discontinued operations was $10 million, or $0.02 a share.

http://biz.yahoo.com/bw/090122/20090122006129.html?.v=1

Ouch. Wasn't AMD supposed to break-even or return to profit by end of 2008? I thought that was their stated goal since 2006. It boggles my mind that AMD can lose this much equity in 90days and remain out of bankruptcy or with their doors open for business at all. How much longer can they continue under this economic situation?

It impresses me they report having spent as much as $3m on just forming the foundry company as far back as Q4'07. That some healthy expenses for a few lawyers who are drafting legal documents, up to and including the $23m spent on still forming the foundry company in Q4'08.

 

[Idontcare]

AMD executives acknowledged Thursday that they plan to let existing inventories in the reseller channel deplete, and then manufacture fewer processors than its customers demand, so as to not be stuck with excess inventory.

http://www.extremetech.com/art.../0,2845,2339449,00.asp

That strikes me as newsworthy. AMD publicly stating they intend to under-supply the markets with their CPU's. Restrict the supply, keep APS's elevated. It's like a reverse price-war.

 

[sliderule]

It's hard to believe they could get away with that, because they may be able to artificially inflate their chips, but they can't control intel's pricing...unless there is some under the table price fixing.

 

[sliderule]

Also just wanted to say, even though I'm rocking intel right now, it'll be a sad day in tech if AMD goes away. Monopolies are bad news for us. 🙁

 

[jones377]

Originally posted by: Idontcare

In the fourth quarter of 2008, AMD reported a net loss of $1.424 billion, or $2.34 per share. For continuing operations, fourth quarter 2008 loss was $1.414 billion, or $2.32 per share, and the operating loss was $1.274 billion.

The results for continuing operations include an unfavorable impact of $996 million, or $1.64 per share as described in the table below. Loss from discontinued operations was $10 million, or $0.02 a share.

http://biz.yahoo.com/bw/090122/20090122006129.html?.v=1

Ouch. Wasn't AMD supposed to break-even or return to profit by end of 2008? I thought that was their stated goal since 2006. It boggles my mind that AMD can lose this much equity in 90days and remain out of bankruptcy or with their doors open for business at all. How much longer can they continue under this economic situation?

That was before the recession hit. Looking at their Q3 report, they might just have pulled it off barely. Although with CPU sales down by 38% (Intel reported less than that) it looks like they also lost quite a bit of marketshare.

 

[gammaray]

Another year like that and their cash reserve will be...$0 what does it mean? Chapter 11.

 

[Duvie]

Most tech companies appear to be talking about idling plants, work thru supplies, etc....Is it just me or does this sound like the start of the ending of price cuts, the ending of newer chip lines, and basically a BORING time in tech....

We might as all settle in with a system for a few years.....

When things were popping I was getting a new system about every 6-9 months....I had my current system for 2 years....I haven't been like that since my k62-400 lasted me 2 years....

 

[sliderule]

On the bright side, maybe software will catch up...lol

 

[Phynaz]

Originally posted by: gammaray
Another year like that and their cash reserve will be...$0 what does it mean? Chapter 11.

They don't have a year. Remember you can't go to zero, you have to have some cash just to keep the lights on. AMD has said in their case that is $600M.

As I said three months ago, at their current cash burn rate they will be out of operating capital at the end of Feburary without some additional funding.

 

[heyheybooboo]

As part of the fab deal (IIRC) a $700mil payment is due in Q109, 40% of debt assumed and ground broken at Malta for the 32nm Fab in Q209.

 

[soccerballtux]

Originally posted by: heyheybooboo
As part of the fab deal (IIRC) a $700mil payment is due in Q109, 40% of debt assumed and ground broken at Malta for the 32nm Fab in Q209.

payment to AMD, AMD's debt assumed right?

 

[Duvie]

Anyway you look at it...it doesn't look good...We could easily have 2 more quarters like this last quater before things stabilize and then may 2-4 quarters to get back to some profitability.....This is including Intel.....

The orders for the next quarter are not looking good....i would be surprised if in a few months we are not hearing about more layoffs at Intel and AMD....plant idlings...etc

 

[Viditor]

Originally posted by: soccerballtux

Originally posted by: heyheybooboo
As part of the fab deal (IIRC) a $700mil payment is due in Q109, 40% of debt assumed and ground broken at Malta for the 32nm Fab in Q209.

payment to AMD, AMD's debt assumed right?

Yes...also AMD's CapEx is reduced by more than 90% because they will no longer need to upgrade Fabs, so their burn rate is drastically reduced as well.

 

[ViRGE]

Originally posted by: Idontcare

AMD executives acknowledged Thursday that they plan to let existing inventories in the reseller channel deplete, and then manufacture fewer processors than its customers demand, so as to not be stuck with excess inventory.

http://www.extremetech.com/art.../0,2845,2339449,00.asp

That strikes me as newsworthy. AMD publicly stating they intend to under-supply the markets with their CPU's. Restrict the supply, keep APS's elevated. It's like a reverse price-war.

That doesn't sound like a price war; they're not doing it to prop up prices. They're getting burnt with excess inventory that they're struggling to get rid of, this is a move to stop having excess inventory eating away at the company's financials every quarter.

Originally posted by: soccerballtux

Originally posted by: heyheybooboo
As part of the fab deal (IIRC) a $700mil payment is due in Q109, 40% of debt assumed and ground broken at Malta for the 32nm Fab in Q209.

payment to AMD, AMD's debt assumed right?

Yes. Basically they're buying a chunk of AMD's fabs and assuming a similar fraction of the debt those fabs carry. AMD's about to get a good chunk of change (albeit one that involves selling a lung, a kidney, a leg, etc), so they're going to have plenty of cash to stay solvent.

 

[batmang]

Ugh, this saddens me. If AMD goes under, Intel is going to do what any top dog company would do, rake in the dollars. Competition is needed! Everyone in this thread, go sell your Intel rigs and buy a Dragon setup. Give AMD your money! 🙂

 

[Viditor]

Originally posted by: batmang
Ugh, this saddens me. If AMD goes under, Intel is going to do what any top dog company would do, rake in the dollars. Competition is needed! Everyone in this thread, go sell your Intel rigs and buy a Dragon setup. Give AMD your money! 🙂

LOL...I know you meant that as a joke, but many actually believe that AMD will be going under very soon.
The sale of the Fabs means that that can't anytime soon (certainly not in 09, and probably not in 10).

 

[gammaray]

Originally posted by: batmang
Ugh, this saddens me. If AMD goes under, Intel is going to do what any top dog company would do, rake in the dollars. Competition is needed! Everyone in this thread, go sell your Intel rigs and buy a Dragon setup. Give AMD your money! 🙂

you know what is the irony about what you said?

AMD isn't profitable making processors or video cards.
It's like General Motors, even if they build a lot of cars, not only they do not make money building and selling them but, they LOSE money just by operating.

Sad.

 

[OCGuy]

Originally posted by: batmang
Ugh, this saddens me. If AMD goes under, Intel is going to do what any top dog company would do, rake in the dollars. Competition is needed! Everyone in this thread, go sell your Intel rigs and buy a Dragon setup. Give AMD your money! 🙂

It is not the consumer's job to give charity. If AMD cannot figure out a way to be profitable selling chips, then that is how the world works. A new #2 will have to emerge to keep Intel honest.

We cant let this "bail-out" mentality that has plauged this country the last 12 months continue.

 

[sliderule]

Originally posted by: Ocguy31

Originally posted by: batmang
Ugh, this saddens me. If AMD goes under, Intel is going to do what any top dog company would do, rake in the dollars. Competition is needed! Everyone in this thread, go sell your Intel rigs and buy a Dragon setup. Give AMD your money! 🙂

It is not the consumer's job to give charity. If AMD cannot figure out a way to be profitable selling chips, then that is how the world works. A new #2 will have to emerge to keep Intel honest.

We cant let this "bail-out" mentality that has plauged this country the last 12 months continue.

Yeah, it's kinda hard to have sympathy for a company that threw away so much money towards its CEO. Remember those bonus's Hector got?

 

[Idontcare]

Originally posted by: sliderule
Yeah, it's kinda hard to have sympathy for a company that threw away so much money towards its CEO. Remember those bonus's Hector got?

It certainly concerns me to see them attributing some $30m in losses in the past year to "forming the foundry company" alone. That is a crapload of money for some champagne and a few hookers for the new buyers, oh and a couple lawyers to recycle the same M&A agreement that has been used since the 60's.

Nemesis said it best in one of his rare lucid moments when he said (paraphrasing) that the best CEO of the decade was Dave Orton of ATi when he convinced AMD's Hector Ruinz that ATi was worth forking out $5.4B.

I'm personally worried about friends and colleagues at AMD who are losing and/or about to lose their jobs in the middle of this ugly housing crash and recession. This is a once-in-a-lifetime godawful time to lose one's source of income. The stress and toll that is taking on good hard-working people is just amazing. Not so much stress in Hector's life though. I heard he made a killing shorting AMD on insider trading. (kidding)

The next concern I have is for my good friends and colleagues at Intel as I have seen firsthand what management does in the face of no competition (Texas Instruments had >80% marketshare in cellphone IC market prior to disbanding their R&D team and going fabless for CMOS at 45nm and beyond)...Intel employees helped Intel management win the battle against AMD but it is the management who will sacrifice the employees to earn their bonuses from the Intel shareholders. No good deed ever goes unpunished.

 

[SChow]

I pretty much agree with everything, consumers shouldn't be propping up companies and if AMD goes under a new #2 will have to emerge, the thing is, I think it's doubtful a new #2 that wields the same / more power as AMD will emerge.

Intel controls the floodgates, and we aren't talking about manufacturing chopsticks or some other trivial item that just about anyone can manufacture.

 

[Denithor]

Well, who exactly could be a new #2? As far as I know, VIA is the only other chipmaker who can legally manufacture x86 chips...and they're practically a joke.

 

[imported_Asianman]

I actually agree with most of these statements. Consumers shouldn't have to put up with second class products, but AMD make COMPETITIVE CPUs and great graphics cards. Unless you need the extra power (high end) intel products give you, buy something AMD and save a company. Oh yes, AMD doesn't loose money selling stuff. They loose money because they can't sell stuff

 

[Idontcare]

Originally posted by: Denithor
Well, who exactly could be a new #2? As far as I know, VIA is the only other chipmaker who can legally manufacture x86 chips...and they're practically a joke.

IBM is the only viable option at this time.

Via is a joke because they have not had access to a leading edge competitive CMOS technology. (and without that, they have had no reason to invest billions into design teams for more competitive CPU architecture designs)

With SUN moving their foundry business from TI to TSMC you can bet TSMC is going to be offering their high-performance CMOS process flows to more than just SUN (unlike what TI did, we held it exclusive for SUN). So Via will have access to that, as will AMD.

And second-source is TFC, once they get the ball rolling TFC is going to be hunting for customers, and their point of differentiation across the foundries is TFC has leading-edge high-performance CMOS...so you can bet they are going to do their best to steal the SUN account as well as approach folks like Via.

 

[Martimus]

Originally posted by: Idontcare

Originally posted by: Denithor
Well, who exactly could be a new #2? As far as I know, VIA is the only other chipmaker who can legally manufacture x86 chips...and they're practically a joke.

IBM is the only viable option at this time.

Via is a joke because they have not had access to a leading edge competitive CMOS technology. (and without that, they have had no reason to invest billions into design teams for more competitive CPU architecture designs)

With SUN moving their foundry business from TI to TSMC you can bet TSMC is going to be offering their high-performance CMOS process flows to more than just SUN (unlike what TI did, we held it exclusive for SUN). So Via will have access to that, as will AMD.

And second-source is TFC, once they get the ball rolling TFC is going to be hunting for customers, and their point of differentiation across the foundries is TFC has leading-edge high-performance CMOS...so you can bet they are going to do their best to steal the SUN account as well as approach folks like Via.

I wouldn't really expect a viable #2 to emerge anytime soon at least. I mean who is the viable #2 in the software industry for Operating Systems? That is a market that doesn't have the huge overhead costs that the Semiconductor industry has as well.

At the point that AMD goes under, the only good hope for a second competitor in the x86 business is if Intel makes a catastrophic choice that allows another player into the market; same as that is the only hope for a second mainstream OS.

Again, this is only my opinion, but I can't see how another company can step in and gain any market share.