AMD appoints new CEO as losses continue

http://www.infoworld.com/article/08/...ontinue_1.html

AMD has replaced Hector Ruiz with Dirk Meyer as its CEO, as the
company reported its seventh consecutive quarterly net loss on
Thursday.

AMD's board has elected Meyer to the CEO spot effective immediately,
AMD said. He was previously president and COO and has been with AMD 12
years. Ruiz will become executive chairman and chair of AMD's board of
directors.

The chipmaker also announced that it has decided to divest its
handheld and digital TV businesses. The company had merged the
businesses into its consumer electronics group after the 2006
acquisition of ATI. Last week, AMD announced it would take a charge of
$880 million related to impaired assets of those businesses.

AMD's revenue from continuing operations for the second quarter rose 3
percent from a year earlier, to $1.35 billion. But the company still
posted a net loss of $1.19 billion, or $1.96 per share.

Second-quarter revenue fell 7 percent compared with the previous
quarter. Unit shipments declined a little and average selling prices
fell more, the company said.

"We have a company rich with great people, great products, great
spirit and a lot of great potential," Meyer said on a conference call
following the financial announcement. "Looking at the recent past, we
have not been living up to that potential. Looking forward, we will."

Ruiz, who remains chairman, will continue to oversee the "asset smart"
strategy initiated under his watch to make AMD less capital-intensive.
The company would not provide more details on what sort of deals the
company will make to carry that out.

Meyer, who is also taking on the title of president, said he plans to
focus AMD more narrowly on large-volume "sweet spots," namely PCs and
volume servers, and increase its focus on execution, including
dependable delivery of products and efficiency.

AMD has suffered from product delays as it struggles against a much
bigger competitor in Intel.

The company expects to achieve sustained profitability beginning in
the second half of this calendar year on the strength of new products
and lower costs, executives said.

[...]

Didn't realize how bad AMD/ATI was doing. AMD stock is 1/10th of what
it was 2 years ago ($4 now vs $40 then). They lost almost $4 billion
this past year. Intel market capitalization is over 60 times AMD.
Intel made a net profit of over $7 billion in the same period. Intel
is rolling out dual and quad core 45nm and AMD still hasn't been able
to come out with 45nm at all. Intel is working on 32nm with over 16
cores for next year.

We could see AMD/ATI fail next year.

> AMD once had a clear-cut opportunity to distance itself from Intel
> but it failed in this mission.

.. . . but that assumes a static situation. If AMD took the lead and/or had
new technology, Intel would offer those guys, the techs, big bucks to work
for Intel. That game goes back and forth.

It seems AMD needs new technology to shoot ahead of Intel.

--g

It looks like buying ATI was like taking a poison pill. Yeah, the
current set of ATI graphics cards are doing alright but they also
don't seem to be priced to make any huge profits. Plus, once Nvidia
gets 45nm versions of the GX260 and GX280 on the market towards the
end of the year at just about the same price point, they are going to
clobber the ATI cards since the GX260 (lower end) is about even with
the HD4870 (high end) in performance right now.

The AMD/ATI financials are here. AMD stock value is 1/4 of what it was
last year at the same time. There are a lot of big negatives on their
balance sheet:

http://www.bloomberg.com/apps/quote?ticker=amd

And this page has even more details. Wow, all of AMD is now worth less
than half of what they paid for ATI in 2006! Looks like that was a
really bad move.

http://www.bloomberg.com/apps/news?p...d=ag3q98IKgmnQ

"This quarter's results bring AMD's total losses to $5.5 billion in
less than two years."

"AMD's total market value is now about half of the $5.4 billion it
paid for graphics-chip maker ATI in 2006."

"In December, AMD delayed the widespread release of a new chip called
Barcelona because the product was running too slowly and causing
errors with some software."

"Blig Merk" <> wrote in message
news:d3780971-8415-4941-b860-...
> It looks like buying ATI was like taking a poison pill. Yeah, the
> current set of ATI graphics cards are doing alright but they also
> don't seem to be priced to make any huge profits. Plus, once Nvidia
> gets 45nm versions of the GX260 and GX280 on the market towards the
> end of the year at just about the same price point, they are going to
> clobber the ATI cards since the GX260 (lower end) is about even with
> the HD4870 (high end) in performance right now.
>
> The AMD/ATI financials are here. AMD stock value is 1/4 of what it was
> last year at the same time. There are a lot of big negatives on their
> balance sheet:
>
> http://www.bloomberg.com/apps/quote?ticker=amd
>
> And this page has even more details. Wow, all of AMD is now worth less
> than half of what they paid for ATI in 2006! Looks like that was a
> really bad move.

I'm not so certain. In the short term, the numbers seem to suggest that AMD
buying ATI was a bad move. And the future might indeed show that it was a
bad move.

HOWEVER, in the context of how hardware components are going to evolve over
the next (roughly) ten years, AMD is still in a better position (after
purchasing ATI) to compete with Intel / nvidia in the LONG run. That is, if
their current financial problems don't totally doom the company to
non-existence.

You need to keep in mind that the CPU, as we know it today, will soon be
replaced by the GPU. In other words, AMD would have to start producing
higher-end "graphics cards" (graphics chips really) or go out of business.
This applies to Intel as well, but Intel has been kinda sorta dabbling in
graphics chips for a long time. So Intel wouldn't necessarily need to buy
an ATI or an nvidia to prepare to retool for the new platforms on the near
horizon, where the GPU takes over the CPU functions.

I know it might be hard for some people to imagine, but the CPU as we know
it today is quickly becoming obsolete. Graphics chips have advanced so far
and become so powerful that soon it will be unnecessary to even install a
CPU in a computer. The graphics processor will soon be so powerful, that
asking the GPU to also perform the CPU functions will be like tossing a bag
of concrete in the back of your pickup. Will the "engine" notice the extra
load or slow down at all? Nope. Likewise, the CPU functions, if handled by
the GPU, will not noticeably slow down the GPU at all.

That is the future of the PC platform...no video card, just a video chip
(GPU) on the mainboard, where the CPU used to be.

So it was the RIGHT thing for AMD to buy ATI. It was their only route that
might possibly lead to the long-term survival of the AMD corporation. Was
it a mistake? I think in the long run one of two things will happen:
1) AMD/ATI will overcome current financial problems and survive long enough
to produce the new GPUs (which function as CPUs also) that bring the
combined corporation back to profitability.
2) AMD, as a corporation, might go bankrupt or be sold to Intel or nvidia
or someone else. But IF this happens, it will not be as a result (direct or
indirect) of the purchase of ATI. Without ATI, option 2 would have
happened, eventually. The purchase of ATI was the only thing that MIGHT
prevent it.

I'm hoping 1 will happen. -Dave

Dave wrote:
> You need to keep in mind that the CPU, as we know it today, will soon be
> replaced by the GPU. In other words, AMD would have to start producing

That is a nice dream but that is all it is. GPU stands for Graphics
Processing Unit and CPU stands for Central Processing Unit. GPU's are
highly specialized for very specific types of calculations and have no
basic Input/Output capabilities (talking with external devices). Even
the recent efforts at a supercomputer on the desk are using general
purpose CPU's with GPU accelerators. Yes, there are physics
accelerators and video transcoder code being transported over to the
GPU now and they are able to process those types of operations much,
much faster than a CPU. But then, look who is doing that. Nvidia, not
ATI. The video transcoder accelerator is coming for the Nvidia GPU
very soon.

No, the decision to buy ATI at such a huge price just at the time they
did, was a very bad move for AMD. It diverted a lot of financing and
resources away from their CPU development at the least affordable time
for them. It stalled their 65nm fabrication to allow Intel enough time
to get their Core 2 Duo out and it has basically shackled them from
even getting close to 45nm when Intel has had 45nm Wolfdale out for
several months now. Now, Intel is making such a huge profit that they
are slashing the price of Wolfdale by 30%. They know this is like
chopping off AMD at the knees right after kicking them in the nuts.
AMD can't recover from this. They don't have a magic rabbit under a
hat to pull out. AMD is shedding assets now like a garage sale. They
might not totally collapse but it is a good possiblity it will split
apart into AMD and ATI again, to be bought off by other companies.

> Hopefully amd has another rabbit in their hat, but it's unlikely. looks
> like curtains.

It isn't that simple. A programming language used by many customers had the
same issues, to the point where the company put in its 10-Q how bad the
market was and no one wants the product and there is no future for it.

What really happened is they were bought by another company and the language
is being happily used by many.

The suggestion that there will be a big hole, once called AMD, is not
reality either.

--g

"Blig Merk" <> wrote in message
news:6fe8e392-deb6-45cf-9038-...
> Dave wrote:
> > You need to keep in mind that the CPU, as we know it today, will soon be
> > replaced by the GPU. In other words, AMD would have to start producing
>
> That is a nice dream but that is all it is. GPU stands for Graphics
> Processing Unit and CPU stands for Central Processing Unit. GPU's are
> highly specialized for very specific types of calculations and have no
> basic Input/Output capabilities (talking with external devices).

It's not a dream. Within 10 or 15 years maximum, main internal components
will likely be sold as one card, probably called a mainboard. But it will
have everything built in. ONE chip on that card, the GPU, will handle CPU
and GPU functions. Current GPUs have no basic input/output capabilities.
But it would be trivial to add those capabilities to a GPU...especially for
a company like AMD, if they were starting with a decent GPU designed by
ummmmmmm...ATI, perhaps.

The only thing I'm wondering about is, will we be able to upgrade that card
by replacing the chip, like we currently can do by replacing the CPU or
replacing the video card? Or will we have to replace the whole "mainboard"
to upgrade? -Dave

>
> It will probably go whichever way there's the most money to be made. My
> suspicion is there are still a lot of business people unhappy that PCs can
be
> built or significantly altered by the end user. If that Genie hadn't got
out of
> the bottle earlier than anybody really realized what was happening, we'd
have no
> more room to tinker with PCs now than we do with laptops. The more
control
> manufacturers have, the more money they can make. I can definitely see
PCs
> becoming more tightly integrated as these "improvements" are introduced.

>
> Larc

Well if desktops get as integrated as laptops, that won't be all bad. It
might lead to some really powerful PCs, cheap. To see what I mean, look at
video cards sold today, and over the last few years. When a new video card
comes out, it is praised as being really powerful and fast, blah blah
blah...and it's typically pretty expensive, relatively speaking. But within
a year (sometimes less) that same $200 or $300 video card can be found on
sale for like $50 after rebate. And it's no less powerful than it was when
it first came out. It's just that it's no longer the fastest thing on the
market, so it can't really be sold at a premium price point anymore. But
it's still got way more processing power than the vast majority of computer
users / builders need.

Same thing could happen when desktops get integrated to the point where just
about everything (except power supply) is on one card. When a new design
comes out, I'm sure you will pay a few hundred bucks for it...or wait until
next year and get it practically free after rebate.

Only bad thing I see is that you won't be able to customize a PC as much as
you can do today. For example, if you really love ATI video solutions but
your favorite mainboard brand decides to use nvidia GPU, then you have a
choice to make, and you can't get everything you want. Today, if you want
an Asus brand mainboard with a ATI video card for example, you can do it.
Or you can buy an nvidia video card or a Intel mainboard or.... -Dave

> Well if desktops get as integrated as laptops, that won't be all bad. It
> might lead to some really powerful PCs, cheap.

I doubt it, the price/performance ratio of laptops is abysmal. If desktops
become like laptops, companies will create marketing levels, want more, pay
more.

The PC industry is struggling now, if the industry used the integrated
approach, it would make their lives that much harder.

--g