Well This Can't Be Good: AMD Axes Carrell Killebrew & Other Employees

[SirPauly]

As long as ATI staff is still there making gpus and apus, i'm gonna call it ATI.

It's not ATI and wasn't ATI, the day Dave Orton and the board decided to sell to AMD.

 

[SirPauly]

OR, where would Bulldozer be if AMD spent $5.4 Billion designing 2 separate CPU architectures: (1) a truly revolutionary desktop CPU that would actually beat Intel on the desktop/server space; and (2) the most efficient per transistor/watt mobile CPU for laptops? Instead they blew > $5.4 billion (because they did an LBO which means paying interest on the loans too!!) on a GPU division that will take 20 years of present value cash flows to make the investment worthwhile. Any idea why not a single company made a competing bid for ATI at the time?

It's pretty hard to design a revolutionary CPU when you've just saddled yourself with massive debt and interest payments for the next 5-10 years. If AMD's GPU division cost more than $5B to create from scratch, why is AMD's market cap just 4.2B? Obviously the ATI part is worth NOWHERE near $5.4B today. It's probably worth $1-1.5B if sold separately today.

You're entitled to your opinion but it was the best move AMD has done to me.

 

[SirPauly]

Yeah, AMD didn't gain nearly the marketshare it deserved for price/performance of 4xxx and 5xxx series. Not sure why OEMs and many people seem to go out of their way to avoid great products.

What kind of market share did they deserve?

 

[SirPauly]

Maybe some of the Armchair CEO'S should apply to AMD since they know how to run the company better than anyone else..

And some people wanting to pay 499 to 650 bucks for a high end card...don't worry if AMD folds you'll have your wish because you'll have no choice.

This logic only makes sense if there are not value choices to consider. There is nothing wrong with choice in that range if there is value at other price-points. nVidia and their AIB's have a lot of choice in that range and yet also have value offerings that compete with AMD as well.

 

[sontin]

You're entitled to your opinion but it was the best move AMD has done to me.

Why?

If we look back we see that a lot of different companies produced "Fusion" before AMD: nVidia (Tegra), Apple (A4), Intel, TI, Qualcomm (own CPU architecture), (...). And the only company of them which bought a "GPU Company" was Qualcomm with ~$68 millions for the mobile GPU segment from AMD..

I don't see how this "was the best move AMD has done". They paid $5,4 billions for ATi, more than $4 billions in cash with only $2,4 billions in their own hands. No money for research, no money for optimising their process technology.

And now they are years behind Intel. Their GPU business is not really creating enough profit (2% of the revenue in the 9 months of this year), no strategie for the ultra low power segment. I think the move to buy ATi is beginning to hurt them really hard.

 

[SirPauly]

It was not just about the Graphics division.

 

[RussianSensation]

Both Intel and nVidia have better brand recognition than AMD. If they priced 4870 at $400 they might have had better margins, but lower market share because nVidia is "the way it's meant to be played"...

That doesn't explain how ATI was able to sell its high-end GPUs for $400-650 and its mid-range GPUs for $200-250 for 5 years before being sold off to AMD. Having higher market share with almost no profits is worse than having low market share and very high profits. See Apple in smartphone business, or well pretty much any business they are in (outside iPods).

How do you know their margins at $300 weren't still better than nVidia's at $400?

Because AMD's GPU division has had small profitability ever since AMD purchased ATI (see historical financials). And again, ATI never sold their GPUs for prices as low as under AMD's management. That's probably because long-term it would have resulted in what AMD is faced with now - low profitability for their discrete GPU division despite extremely high costs required to keep designing advanced GPUs. Obviously, ATI understood this and priced their low-mid-and high end GPUs higher. And again, gamers had no problems paying those higher prices. $399 9700 Pro has legendary status, while 9800XT, X800XT, X1800XT/X1900XT series, etc. also held their own.

The idea that AMD suddenly needed to sell GPUs at $250-350 to compete with NV is questionable imho. It looks like the the cost savings by going with small-die strategy vs. large die and better performance (which historically allowed ATI to charge higher prices), didn't work out as well as they had hoped. If the strategy was actually successful, the cost savings of a small-die strategy would have offset the loss of higher profit margins from selling higher priced cards. It doesn't look like this has happened. NV still sells its cards for higher prices around the world, on average, and not coincidentally has higher gross margins and profitability.

I won't comment on Bulldozer pricing, but I thought they "fixed" 6950 unlocking a while ago? And $100 difference, wasn't that the 1GB version that couldn't be unlocked?

Most of the HD6950 2GB cards can still be unlocked. The unlocking almost never stopped. Yes, the actual BIOS switch has been removed on most boards, but there was still a way to flash the BIOS. It was more risky since you didn't have a backup BIOS, but you could do it. Also, you still have Sapphire Dirt 3 Edition that still unlocks. Granted, the problem is likely not just this 1 unlocking fiasco. Having your mid-range HD6850/6870 cards sell for $140-160 on the market isn't really contributing to discrete GPU profitability either. So, just across the board, AMD's GPUs are priced too low, partially because they aren't faster enough over NV's cards to sell for higher prices - a likely consequence of a small die strategy.

I don't recall ever seeing 6950 under $270, and I'm from the same city as you...

My bad, I was talking about the US market.

You're entitled to your opinion but it was the best move AMD has done to me.

1. Long-term, maybe, but the timing of the buyout was poor and the premium paid for the acquisition too high. I bumped into one of the ibankers working on that deal in Toronto. He told me his team was scratching his head to try to derive the premium for ATI's stock at the time, but they couldn't financially justify it using the business' fundamentals.

So they came up with all kinds of creative financial assumptions (lower discount rate, higher growth assumptions (what we call in the industry "hockey stick projections"), and what he told me at the time specific "synergies" between AMD and ATI). But he told me they couldn't strategically/financially justify exactly where those synergies would come from. The synergistic value number was "added to the model" to back into the 5.4B DCF value to present to AMD's board (remember ATI is their client who wanted a higher price for their business).

Keep in mind, iBankers make $$$ by pitching a business. They are "sales" people. They aren't necessarily looking for the best interests of the buyer (that's the job of the due diligence team on the other side).....but from our discussions, he and his team were of the view that ATI was actually NOT worth $5.4B given its then existing product lines and projections for future cash flows.

2. ATI stock was trading at significantly lower prices for a long period of time prior to the acquisition. Why didn't AMD purchase them then?

3. You have no competing bids. Why pay such a huge premium to acquire a business?

4. It's too easy to say that AMD is better off now that they have purchased ATI since we don't really know if AMD would have been better off had they had more financial resources to properly design Bulldozer.

5. One of the main reasons to buy someone else's business/IP is because you can't create the same product/IP internally for lower cost OR if by acquiring new business/IP you are able to accelerate your business' entry into new lucrative market segments.

Neither of these was true in the acquisition of ATI. On the timing side, Fuision was supposed to be ready as early as 2008, early 2009. As such, it was grossly behind shedule.

On the cost side, if you look at Intel, they were able to hire enough talented engineers to design "good enough" HD3000 GPU for their APU strategy. Was it really necessary for AMD to spend $5.4B to acquire ATI to get "good enough" Fusion to compete with Intel graphics? I don't think so.

Instead, AMD's ATI acquisition positioned itself to compete a 2-front war: against Intel on CPUs and against NV on the GPUs; something that's extremely difficult to do with limited resources, esp. when you are forced to cover the massive interest payments on the debt from your leveraged buyout purchase.

IMHO, to imply that AMD's ATI buyout is the best thing to ever happen to AMD is to deny the alternative possibility that could have brought more success to AMD : Where would AMD be if it had an extra $5.4B + interest payments to invest into its CPU business; and had it chosen to hire the same talented engineers that Intel hired to design "good enough" Fusion graphics?

Of course, I admit, most of my rant about what "could have happened" isn't really relevant now. But I just wanted to bring to your attention that AMD buying ATI wasn't a slam dunk as you view it. We are going to find out on Nov 9th how drastic the changes to AMD's core strategy will be.

 

[NIGELG]

That doesn't explain how ATI was able to sell its high-end GPUs for $400-650 and its mid-range GPUs for $200-250 for 5 years before being sold off to AMD. Having higher market share with almost no profits is worse than having low market share and very high profits. See Apple in smartphone business, or well pretty much any business they are in (outside iPods).



Because AMD's GPU division has had small profitability ever since AMD purchased ATI (see historical financials). And again, ATI never sold their GPUs for prices as low as under AMD's management. That's probably because long-term it would have resulted in what AMD is faced with now - low profitability for their discrete GPU division despite extremely high costs required to keep designing advanced GPUs. Obviously, ATI understood this and priced their low-mid-and high end GPUs higher. And again, gamers had no problems paying those higher prices. $399 9700 Pro has legendary status, while 9800XT, X800XT, X1800XT/X1900XT series, etc. also held their own.

The idea that AMD suddenly needed to sell GPUs at $250-350 to compete with NV is questionable imho. It looks like the the cost savings by going with small-die strategy vs. large die and better performance (which historically allowed ATI to charge higher prices), didn't work out as well as they had hoped. If the strategy was actually successful, the cost savings of a small-die strategy would have offset the loss of higher profit margins from selling higher priced cards. It doesn't look like this has happened. NV still sells its cards for higher prices around the world, on average, and not coincidentally has higher gross margins and profitability.



Most of the HD6950 2GB cards can still be unlocked. The unlocking almost never stopped. Yes, the actual BIOS switch has been removed on most boards, but there was still a way to flash the BIOS. It was more risky since you didn't have a backup BIOS, but you could do it. Also, you still have Sapphire Dirt 3 Edition that still unlocks. Granted, the problem is likely not just this 1 unlocking fiasco. Having your mid-range HD6850/6870 cards sell for $140-160 on the market isn't really contributing to discrete GPU profitability either. So, just across the board, AMD's GPUs are priced too low, partially because they aren't faster enough over NV's cards to sell for higher prices - a likely consequence of a small die strategy.



My bad, I was talking about the US market.




1. Long-term, maybe, but the timing of the buyout was poor and the premium paid for the acquisition too high. I bumped into one of the ibankers working on that deal in Toronto. He told me his team was scratching his head to try to derive the premium for ATI's stock at the time, but they couldn't financially justify it using the business' fundamentals.

So they came up with all kinds of creative financial assumptions (lower discount rate, higher growth assumptions (what we call in the industry "hockey stick projections"), and what he told me at the time specific "synergies" between AMD and ATI). But he told me they couldn't strategically/financially justify exactly where those synergies would come from. The synergistic value number was "added to the model" to back into the 5.4B DCF value to present to AMD's board (remember ATI is their client who wanted a higher price for their business).

Keep in mind, iBankers make $$$ by pitching a business. They are "sales" people. They aren't necessarily looking for the best interests of the buyer (that's the job of the due diligence team on the other side).....but from our discussions, he and his team were of the view that ATI was actually NOT worth $5.4B given its then existing product lines and projections for future cash flows.

2. ATI stock was trading at significantly lower prices for a long period of time prior to the acquisition. Why didn't AMD purchase them then?

3. You have no competing bids. Why pay such a huge premium to acquire a business?

4. It's too easy to say that AMD is better off now that they have purchased ATI since we don't really know if AMD would have been better off had they had more financial resources to properly design Bulldozer.

5. One of the main reasons to buy someone else's business/IP is because you can't create the same product/IP internally for lower cost OR if by acquiring new business/IP you are able to accelerate your business' entry into new lucrative market segments.

Neither of these was true in the acquisition of ATI. On the timing side, Fuision was supposed to be ready as early as 2008, early 2009. As such, it was grossly behind shedule.

On the cost side, if you look at Intel, they were able to hire enough talented engineers to design "good enough" HD3000 GPU for their APU strategy. Was it really necessary for AMD to spend $5.4B to acquire ATI to get "good enough" Fusion to compete with Intel graphics? I don't think so.

Instead, AMD's ATI acquisition positioned itself to compete a 2-front war: against Intel on CPUs and against NV on the GPUs; something that's extremely difficult to do with limited resources, esp. when you are forced to cover the massive interest payments on the debt from your leveraged buyout purchase.

IMHO, to imply that AMD's ATI buyout is the best thing to ever happen to AMD is to deny the alternative possibility that could have brought more success to AMD : Where would AMD be if it had an extra $5.4B + interest payments to invest into its CPU business; and had it chosen to hire the same talented engineers that Intel hired to design "good enough" Fusion graphics?

Of course, I admit, most of my rant about what "could have happened" isn't really relevant now. But I just wanted to bring to your attention that AMD buying ATI wasn't a slam dunk as you view it. We are going to find out on Nov 9th how drastic the changes to AMD's core strategy will be.

Good points though.....but why was ATi on the market to be bought in the first place?

I am of the layman's view that they should have stayed by themselves....ATi vs Nvidia and AMD vs Intel....

 

[Arkadrel]

AMD probably payed to much for ATI.
Still... where would AMD be today without ATI?

Would it have APUs (best thing CPU side, amd has currently).

I mean their bulldozer was a flop... could you imagine AMD without GPUs/APU?

 

[SirPauly]

ATI wasn't really up for sale and was doing fantastically at that time -- their market cap was around 4.2 billion dollars -- so AMD may of decided to pay a premium before any other suitors may enter the fray. If Intel entered a bidding war with AMD -- who would win?

AMD could pull it off and did pull it off and the best move for their company for growth, moving forward to me.

 

[exar333]

OR, where would Bulldozer be if AMD spent $5.4 Billion designing 2 separate CPU architectures: (1) a truly revolutionary desktop CPU that would actually beat Intel on the desktop/server space; and (2) the most efficient per transistor/watt mobile CPU for laptops? Instead they blew > $5.4 billion (because they did an LBO which means paying interest on the loans too!!) on a GPU division that will take 20 years of present value cash flows to make the investment worthwhile. Any idea why not a single company made a competing bid for ATI at the time?

It's pretty hard to design a revolutionary CPU when you've just saddled yourself with massive debt and interest payments for the next 5-10 years. If AMD's GPU division cost more than $5B to create from scratch, why is AMD's market cap just 4.2B? Obviously the ATI part is worth NOWHERE near $5.4B today. It's probably worth $1-1.5B if sold separately today.



Not sure from which angle was HD3000 series good? It was one of the worst performances from AMD in years, only "bested" by the HD2900 flop. HD3000 was not competitive with GeForce 8.

Regarding the popular HD4000 series: it's very easy to have a successful generation when you are practically giving them away at $199 and $299. From a business perspective, HD4000 generation was only to regain mind-share among gamers after the horrendous HD2900 and lacklustre HD3800 series. I bet it barely made any $ for ATI.

HD5000 series, pretty much the same thing. HD5850 was selling for $270 and HD5870 for $370.

HD6000 series, here buy a $230-240 HD6950 and unlock it into a 6970. That alone pretty much cannibalized the sales of HD6970 series.

AMD GPU division has provided some of the best deals for us gamers. But as a business, it was pretty much sacrificing Average Selling Prices / Profitability for market share. Despite all that, NV has been selling their GPUs for higher prices and making bank, while still having almost 60% desktop discrete market share.

It's very easy to have a good generation in the eyes of hardware enthusiasts when you are selling your high-end single GPU card for $250 that unlocks into a $370 card, while and your competitor is selling theirs for $300-500. But you are in the business of making $$$, not making Joe Smith drool over his unlockable HD6950. Look at HD6850/6870. Those cards are selling for $120-150. You can barely make $$ on that. AMD probably needs to sell 10 HD6870s to make as much $ as NV makes off 1-2 GTX580s.

AMD's current graphics card strategy is not at all like the "winning ATI" of the past, which often sold top-end single GPU cards for $400-650. ATI of the past had far higher cash flows, far higher profitability/margins, far higher average selling prices, and almost never resorted to undercutting its competitor on price by significant amounts (definitely not $100s of dollars). ATI of the past always wanted to have the single GPU performance crown. ATI was never regarded as the "budget" (i.e., cheaper) performance brand. ATI stood on equal footing with Nvidia and the firm's prices reflected their belief that their products were as good.

Historical launch MSRPs:

9700Pro = $399
9800XT = $499
X800XT = $499 and Platinum Edition for $549.
X1800XT = $599
X1900XT = $599, and XTX version for $649

By pricing their high-end cards at $400-650, ATI's mid-range cards sold for $250-300, not for $140-150 like HD6850 and HD6870 are today.....ATI was making more $$ in all desktop segments since it had a much more steep price curve. Today, HD6970 tops out at about $350, hardly anyone cares for HD6990 and AMD's mid-range sells for what historically was a price range for low-end cards.

I am not going to list prices for HD3000, 4000, 5000 and 6000 series. But you know they were MUCH lower. If HD7970 is better than GTX580, AMD should launch it at $499-549, not $369, and actually make $$$. If Kepler is better, they can lower the price. We'll see if Read changes the pricing for AMD's GPU division.

Problem is, now that AMD messed up the entire GPU pricing structure of the market after low-balling HD4000-6000 series, gamers have been spoiled. We now *expect* to pay $299-350 for a high-end AMD GPU and $149-199 for a mid-range GPU. If AMD never resorted to price cuts, we would still be willing to pay $399-499 for a high-end GPU. Now that the consumer is used to the new pricing structure, it's going to be very difficult to AMD to raise prices now.....

The market changed. The average PC sales price is <$1000, the market will not support $500+ GPUs much anymore. The same way CPUs cannot sell for 500-1500 like they did in the 90's. Also, AMD needed to gain market share because of their struggles in the 1900 2900 days. The 3000 series was decent, and was the building-block to what they leveraged for the 4000/5000/6000 series.

 

[SirPauly]

What struggles in the 1900 days?

http://seekingalpha.com/article/127...2006-earnings-conference-call-transcript-atyt

 

[bryanW1995]

It was not just about the Graphics division.

What? Were they buying ati's stealth fighter division as well??

 

[iCyborg]

That doesn't explain how ATI was able to sell its high-end GPUs for $400-650 and its mid-range GPUs for $200-250 for 5 years before being sold off to AMD. Having higher market share with almost no profits is worse than having low market share and very high profits. See Apple in smartphone business, or well pretty much any business they are in (outside iPods).

Apple has low market share with iPhones? Seriously?

Because AMD's GPU division has had small profitability ever since AMD purchased ATI (see historical financials). And again, ATI never sold their GPUs for prices as low as under AMD's management. That's probably because long-term it would have resulted in what AMD is faced with now - low profitability for their discrete GPU division despite extremely high costs required to keep designing advanced GPUs. Obviously, ATI understood this and priced their low-mid-and high end GPUs higher. And again, gamers had no problems paying those higher prices. $399 9700 Pro has legendary status, while 9800XT, X800XT, X1800XT/X1900XT series, etc. also held their own.

The idea that AMD suddenly needed to sell GPUs at $250-350 to compete with NV is questionable imho. It looks like the the cost savings by going with small-die strategy vs. large die and better performance (which historically allowed ATI to charge higher prices), didn't work out as well as they had hoped. If the strategy was actually successful, the cost savings of a small-die strategy would have offset the loss of higher profit margins from selling higher priced cards. It doesn't look like this has happened. NV still sells its cards for higher prices around the world, on average, and not coincidentally has higher gross margins and profitability.

That's also ignoring the general financial climate, take a look at other company financials during the 2008-2010 period, and we're still not at pre-recession levels, and overall profitability is more dependent on low-end/mainstream than high-end. Then the whole buyout probably also had impact, it's comparing apples and oranges without a more detailed analysis. Why doesn't Intel charge $400 for 2600K? It would still sell pretty well. Do they also not like higher margins? Or $500, sure they wouldn't sell as well, but it's better to have low market share with very high margins, right?
NV's higher gross margins are mainly from professional series where they have a bigger market share than desktops. Which is probably why GCN is more about workstations than consumer desktops.
What I'm trying to say is that there's probably a whole bag of factors, some of which we can't know, and you're taking into account just a couple of them.

Yes, the actual BIOS switch has been removed on most boards, but there was still a way to flash the BIOS. It was more risky since you didn't have a backup BIOS, but you could do it.

atiflash allows you to back up the current VBIOS, why is this a problem?

 

[SirPauly]

What? Were they buying ati's stealth fighter division as well??

Chip sets, and the ability to create Fusion -- platform strategies, etc..

 

[sontin]

NV's higher gross margins are mainly from professional series where they have a bigger market share than desktops. Which is probably why GCN is more about workstations than consumer desktops.
What I'm trying to say is that there's probably a whole bag of factors, some of which we can't know, and you're taking into account just a couple of them.

nVidia's Geforce gross margins are much higher than these from AMD's radeon series. Look at their quarter result: After nVidia introduce Fermi for Geforce their margins gone up - from 43% -> 51%. The Geforce business stands for 60% of their revenue and it's 3x higher than the quadro segment.

 

[bryanW1995]

Chip sets, and the ability to create Fusion -- platform strategies, etc..

The chipset business is tiny in comparison to $5.4 billion. Platform strategies (spider, etc) has some merit, but again it is very small overall. Fusion was/is the driver of this bus, but why couldn't they have just entered into a strategic partnership with amd/nvidia, instead? That would have been extremely cheap, especially at the beginning, thus freeing up much-needed capital for things like emerging technologies, new cpu design (BD), etc etc.

Buying ATI isn't going to kill AMD, but buying it for $5.4 billion very well could.

 

[SirPauly]

What could AMD offer ATI or nVidia in a strategic relationship or partnership?

 

[RussianSensation]

Apple has low market share with iPhones? Seriously?

Ummm...in the overall mobile phone market? Yes! Seriously!. :biggrin:

Source

Like I said, it's perfectly fine to have low market share as long as that market share is very profitable:

From the link (Nov 4, 2011): "With 4&#37; market share, Apple's iPhone rakes in 52% of mobile profits. The iPhone dipped from a 5.4 percent market share to its current 4.2 percent as Samsung is estimated to have led the industry in smartphone shipments for the quarter, though its profits shrank."

If AMD only had 5% market share in severs and 20% in PCs, but occupied the upper high-end echelon and had very high profitability, no many would be complaining. But AMD has low market share and low profitability.

That's also ignoring the general financial climate, take a look at other company financials during the 2008-2010 period, and we're still not at pre-recession levels, and overall profitability is more dependent on low-end/mainstream than high-end.

NV charges $499 for a GTX580, do they not? What about GTX280/285, 8800GTX, GTX260 216, etc. NV always charges more $ because the business is too risky to engage in a price war. NV was only forced to go into price war because AMD thought it was a good idea. How is that strategy working for AMD's GPU division?

Why doesn't Intel charge $400 for 2600K? It would still sell pretty well.

Because 2600k is considered a Performance CPU platform (S1155) for Intel not Enthusiast platform CPU (X79 platform). They'll sell you $400-1000 CPUs if you want --> Socket X79 launches soon. Also 2700k is $370 on Newegg.

Do they also not like higher margins?

Intel has > 60% gross margins. By selling 2600k at $320, they achieve their target since they have a more efficient cost structure and the die size for 2600k is much smaller than it is for HD6950/6970 or any of the previous HD4870/4890/5850/5870 cards. So Intel doesn't have the same need to have higher prices to achieve profitability. Also, the GPU chip needs a PCB, Ram, a more expensive cooling solution, power circuitry, etc. A GPU is so much more complex. And yet, AMD sells a much more complex HD6970 videocard for what it Intel sells the 2700k chip with a $3 heatsink. :sneaky:

 

[ocre]

wow, look at the response posts in the op's link: http://semiaccurate.com/2011/11/03/amd-cuts-10-of-workforce-leaves-one-group-untouched/

AMD employees are definitely active in their boards, would you al agree?

Most of all the anti nvidia/ praise AMD propaganda for the day starts from this site, a site that is completely smothered in AMD marketing and employees. It starts there and spreads all over. Is their anyone still doubting those same ppl smear their propaganda throughout the forums all over, even to sites like anand? I mean, just look at it. What about the all the BD marketing threads here? The gig is up!

Its actually pretty funny how snowballed they had the public. Evil nvidia, Evil intel. Amd all loving, everything that is good, bla bla bla.

hahaha! At S/A their infestation is so bad they are now fighting among themselves, LoL

 

[RussianSensation]

What could AMD offer ATI or nVidia in a strategic relationship or partnership?

Believe it or not, many investors/analysts thought the deal was actually stupid.

http://www.pcreview.co.uk/forums/amd-close-5-5-billion-deal-ati-t2650159.html

Some highlights:

As one analyst put it, "Breathtakingly stupid". I have *NO IDEA* why
EITHER company would be considering this, it's a definite lose-lose
situation for both of them. The one company that REALLY stands to
benefit from this deal is nVidia.

By joining up with AMD, ATI is likely to lose all their deals with
Intel for chipsets. That includes not only motherboard chipsets but
also their deal to make Crossfire work on Intel boards. This would
probably cut ATI's revenue by about 20&#37; in the next year or so. It
might also seriously hamper ATI's ability to make their video chipsets
work well with Intel's motherboard chipsets making their long-term
prospects seem even more bleak. [This came true]

For AMD it would probably seriously hamper their relationship with
nVidia, one of their top partners. It is a HUGE investment in a VERY
tricky market. Given the above it's likely to buy AMD a company with
rising costs and sinking revenues. It will also burn up pretty much
all their cash flow, which hasn't exactly been their strong point.[This came true]

For all that, AMD will get reduced focus, duplication of workforce,
complicated licensing deals that will cost many millions in lawyers
fees to sort out and two company cultures that might not mix very well
(just ask HP and Compaq about mixing company cultures.. this is a
major reason why that merger was a miserable failure).[This came true]

The biggest potential benefit for AMD is that it gives them a
reasonably good motherboard chipset development team. However this
bonus is watered down somewhat by the fact that the deal might ****
off nVidia who currently make some of the best chipsets for AMD
processors. The benefit for ATI is that it will give them in-house
fab capabilities for their video and motherboard chipsets (if AMD
decides to use their upcoming capacity for this), which might give
them a competitive advantage over nVidia for video chipsets. Again
though this might be offset by being considered a second-class video
chip manufacturer by Intel, giving nVidia a competitive advantage
there. [This somewhat came true, but not the part about giving AMD a competitive advantage over NVidia by using AMD fabs....]

As mentioned above, the only company that really stands to benefit
from this deal is nVidia. AMD will want to keep nVidia happy and
making motherboard and video chipsets for their processors, at least
for the short term. Intel will want to make nVidia doubly-happy and
probably cut-out Crossfire and start supporting SLI instead.

As for Intel, they can largely control their own destiny. Their main
advantage in this deal is that it will reduce AMD's focus on their
core business, reducing their ability to make competitive processors.
[This came true with Phenom I/II and Bulldozer]

If this merger DOES go through, look to see Hector Ruiz (AMD's CEO)
being unceremoniously fired in about 3 years time when it's clear that
the merger was an utter failure.
[This came true]

 

[Ovven]

Considering that Intel squeezed Nvidia out of chipset market anyway, where would have left ATI? With only their gpus to fall back on, and no marketshare in workstations ATI would have been lucky to survive up until now.

 

[SirPauly]

Believe it or not, many investors/analysts thought the deal was actually stupid.

http://www.pcreview.co.uk/forums/amd-close-5-5-billion-deal-ati-t2650159.html

Some highlights:

As one analyst put it, "Breathtakingly stupid". I have *NO IDEA* why
EITHER company would be considering this, it's a definite lose-lose
situation for both of them. The one company that REALLY stands to
benefit from this deal is nVidia.

By joining up with AMD, ATI is likely to lose all their deals with
Intel for chipsets. That includes not only motherboard chipsets but
also their deal to make Crossfire work on Intel boards. This would
probably cut ATI's revenue by about 20% in the next year or so. It
might also seriously hamper ATI's ability to make their video chipsets
work well with Intel's motherboard chipsets making their long-term
prospects seem even more bleak. [This came true]

For AMD it would probably seriously hamper their relationship with
nVidia, one of their top partners. It is a HUGE investment in a VERY
tricky market. Given the above it's likely to buy AMD a company with
rising costs and sinking revenues. It will also burn up pretty much
all their cash flow, which hasn't exactly been their strong point.[This came true]

For all that, AMD will get reduced focus, duplication of workforce,
complicated licensing deals that will cost many millions in lawyers
fees to sort out and two company cultures that might not mix very well
(just ask HP and Compaq about mixing company cultures.. this is a
major reason why that merger was a miserable failure).[This came true]

The biggest potential benefit for AMD is that it gives them a
reasonably good motherboard chipset development team. However this
bonus is watered down somewhat by the fact that the deal might ****
off nVidia who currently make some of the best chipsets for AMD
processors. The benefit for ATI is that it will give them in-house
fab capabilities for their video and motherboard chipsets (if AMD
decides to use their upcoming capacity for this), which might give
them a competitive advantage over nVidia for video chipsets. Again
though this might be offset by being considered a second-class video
chip manufacturer by Intel, giving nVidia a competitive advantage
there. [This somewhat came true, but not the part about giving AMD a competitive advantage over NVidia by using AMD fabs....]

As mentioned above, the only company that really stands to benefit
from this deal is nVidia. AMD will want to keep nVidia happy and
making motherboard and video chipsets for their processors, at least
for the short term. Intel will want to make nVidia doubly-happy and
probably cut-out Crossfire and start supporting SLI instead.

As for Intel, they can largely control their own destiny. Their main
advantage in this deal is that it will reduce AMD's focus on their
core business, reducing their ability to make competitive processors.
[This came true with Phenom I/II and Bulldozer]

If this merger DOES go through, look to see Hector Ruiz (AMD's CEO)
being unceremoniously fired in about 3 years time when it's clear that
the merger was an utter failure.
[This came true]

None of this changes anything. AMD did purchase ATI and imho, was the best move the company could of made to me. Graphics division is strong, with more focus on GPU processing, for future revenues and growth -- computing is growing with chip-sets and APU's.

 

[Skurge]

Ummm...in the overall mobile phone market? Yes! Seriously!. :biggrin:

Source

Like I said, it's perfectly fine to have low market share as long as that market share is very profitable:

From the link (Nov 4, 2011): "With 4% market share, Apple's iPhone rakes in 52% of mobile profits. The iPhone dipped from a 5.4 percent market share to its current 4.2 percent as Samsung is estimated to have led the industry in smartphone shipments for the quarter, though its profits shrank."

If AMD only had 5% market share in severs and 20% in PCs, but occupied the upper high-end echelon and had very high profitability, no many would be complaining. But AMD has low market share and low profitability.



NV charges $499 for a GTX580, do they not? What about GTX280/285, 8800GTX, GTX260 216, etc. NV always charges more $ because the business is too risky to engage in a price war. NV was only forced to go into price war because AMD thought it was a good idea. How is that strategy working for AMD's GPU division?



Because 2600k is considered a Performance CPU platform (S1155) for Intel not Enthusiast platform CPU (X79 platform). They'll sell you $400-1000 CPUs if you want --> Socket X79 launches soon. Also 2700k is $370 on Newegg.



Intel has > 60% gross margins. By selling 2600k at $320, they achieve their target since they have a more efficient cost structure and the die size for 2600k is much smaller than it is for HD6950/6970 or any of the previous HD4870/4890/5850/5870 cards. So Intel doesn't have the same need to have higher prices to achieve profitability. Also, the GPU chip needs a PCB, Ram, a more expensive cooling solution, power circuitry, etc. A GPU is so much more complex. And yet, AMD sells a much more complex HD6970 videocard for what it Intel sells the 2700k chip with a $3 heatsink. :sneaky:

Apple ONLY sell smartphones, so you can't compare overall marketshare. They have 14% smartphone marketshare, and only recently fell behind samsung.

 

[ocre]

None of this changes anything. AMD did purchase ATI and imho, was the best move the company could of made to me. Graphics division is strong, with more focus on GPU processing, for future revenues and growth -- computing is growing with chip-sets and APU's.

Really? without any imagination perhaps, maybe.

More focus on computing? Its stands to reason ATI would have great interest in this direction regardless of AMD buying them or not. Nvidia going this direction would have lead ATI in the same following. Without AMD, Ati could have actually been more aggressive and might have been more competitive in this field keeping nvidia from having as much of the market cornered.

Instead of compute the focus is fusion, which is a big shot in their own foot. You cant see how this hurts the graphics division along with AMD as a whole? Fusion may be innovative but its low margins are a slow starvation.

With a little imagination you can see many different paths and outcomes play out. Saying it was the best move is really hard for me to grasp? It was a huge gamble and we have yet to see how it pans out. In many many ways things look a little shaky at AMD, it seems your blind to this. We have yet to see how much good fusion will do for AMD, if any at all. We do see a graphics division with very low quarterly earnings, a new cpu line that is full of question. This line is the future of fusion and its looking anything but rosy.

At best i could see someone saying they support the AMDs buying of ATI. That there is a chance the gamble would pay off. But to claim its the best decision that AMD could make, out of the multitudes of alternate endless decisions possible???? We are still seeing AMD stumble, its just premature to claim any good yet. It may turn out great, but........

I would love to see it be great, but i see to many conflicts. Fusion isnt good for ATI, its a shot in the foot. Bulldozer is AMDs half focused CPU. Fuse a 20w iGPU on it and its still not looking like something great to me. I still reserve my final thoughts for the time being. But preliminary hypothesis from me says, AMD is in a mess that is of its own making. I think AMD is aware of this, maybe there is reasons for concern here????