AMD Could Run Out of Cash by May

Post by **sbp** » Mon Oct 28, 2002 8:05 am

OCTOBER 21, 2002

BUSINESS WEEK NEWS: ANALYSIS & COMMENTARY

When Advanced Micro Devices Inc. (AMD ) announced on Oct. 1 that revenue for the third quarter will be at least $100 million lower than expected, few were surprised. After all, apart from Dell Computer Corp. (DELL ), tech continues to languish. Indeed, the Sunnyvale (Calif.) company blamed lousy market conditions for its fifth loss in as many quarters. "Weakness in the personal-computer market continues to impact AMD," lamented Chief Financial Officer Robert J. Rivet Sr.

But if the economy is hardly helping, many of AMD's travails appear self-inflicted. Its current chips are too slow for the higher-margin desktops PC makers are now concentrating on to boost profits, while production glitches have delayed its next-generation PC chips. Worse, AMD is falling behind in its bid to crack the lucrative server market. With the company burning through cash and its market share crumbling, CEO Hector de Jesus Ruiz will have to pull out all the stops to get AMD back on track.

That's quite a reversal for a company that only 2 1/2 years ago boasted the fastest microprocessors in the world. Now, with Intel Corp. (INTC ) preparing to roll out a souped-up 3 gigahertz Pentium 4 processor in November, AMD is still struggling to make chips that pass the 2-gigahertz mark. Moreover, the widely anticipated launch of its next-generation Hammer family of chips, has been delayed until February or March--more than a year later than originally planned. As a result, AMD's market share may dwindle from a high of 22% in 2001 to 15% by yearend, says Merrill Lynch & Co. analyst Joseph Osha. "AMD is losing an enormous amount of ground in the microprocessor business," he adds.

How did AMD lose the lead in speed it once enjoyed over its much bigger rival? Intel has put in place new production techniques that enable it to make ever faster chips at a drastically cheaper cost. The combination is letting Intel beat AMD on both speed and price. In contrast, AMD's Athlon chip was never designed to run as fast as the current Pentium 4. Although AMD has managed to pump up the speed, it has yet to duplicate Intel's ability to spit the chips out more cheaply.

Despite these problems, Ruiz, who took the helm in April, insists AMD's woes are temporary. He's pinning his hopes on next-generation processors for PCs and servers, which can run desktop applications much faster than current chips. The big question is whether there is sufficient demand for such sophisticated chips. There aren't many applications yet that need such processing power. But Ruiz plans to compete on price and figures with the likes of Dell and Apple Computer Inc. will buy the high-performance chip at a cheaper price than that of rivals.

Ruiz is also seeking to tap new markets. In February, AMD acquired Alchemy Semiconductor Inc. It makes low-power chips used in handheld and tablet PCs, car navigation, and networking gear. Two months ago, AMD also unveiled low-power flash-memory chips for cell phones and handhelds. And it recently rolled out chips that significantly boost the amount of data that can be stored on a single chip. "We're way farther ahead of the game [than] people think we are," says Ruiz.

Maybe, but first, he must shore up AMD's perilous finances. The move to more sophisticated production processes is depleting AMD's cash stockpile. At current rates, it could go through its $1.1 billion cash reserves by the end of May. To stem the flow, AMD is expected to renegotiate millions in debt coming due over the next four years. More restructuring is also possible after the decision early this year to shut two plants in Texas and fire 2,240 workers.

For 33 years, AMD has managed to survive many scrapes in its David vs. Goliath battle with Intel. And no one in the industry wants a monopoly to emerge. That's why AMD is likely to keep nipping at Intel's heels--though it will need to strike a major blow with Hammer to win back market share.

By Cliff Edwards in San Mateo, Calif.

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similiar warning: http://www.infoworld.com/articles/hn/xm ... ml?s=IDGNS

Intel's $10 Billion Gamble

"In June, AMD held $1.1 billion in cash assets; the company's cash holdings dropped to $891.0 million in the third quarter" http://www.extremetech.com/article2/0,3 ... 404,00.asp

wvjohn · Post by **wvjohn** » Mon Oct 28, 2002 8:45 am

maybe dell or aol will buy them

honz · Post by **honz** » Mon Oct 28, 2002 12:55 pm

i sure hope so. it has seemed like AMD hasn't done chit for awhile. but like they said they've survived 33 yrs with ups and downs =)

Kal-EL6 · Post by **Kal-EL6** » Mon Oct 28, 2002 5:02 pm

i think AMD is just biding it's time. i'm a big fan of the underdog and AMD is it. Some time soon they're gonna drop a bomb on Intel. I think right now they're just letting Intel feel comfy until they open up the nitros. After all, the best things come to those who wait..........besides, i'd rather see a stable 3.5 or 4GHZ AMD than a half-hearted 3GHZ prototype!!!

Buzz · Post by **Buzz** » Tue Oct 29, 2002 3:34 am

Yeah, and remember, Athlon XP isn't AMD's only product.
They make a lot of other IC chips too.

Nevertheless, i'm not leaving this ship

Pugsley · Post by **Pugsley** » Tue Oct 29, 2002 8:17 pm

I used... "used" to be hard core Intel. but then the P3 came out and my god the price. AMD is still cheaper then Intel. And i enjoy having a stabel computer that doesent totaly rely on cooling for it to work like intel. Hell, the P4 will clock itsself back if it gets too hot. So in therory, they will never go as fast as they say they will unless your a god of cooling.

matt719 · Post by **matt719** » Tue Oct 29, 2002 9:48 pm

I hate how people judge a cpu by it's "MHz" rating. The fact of the matter is, a AMD XP 1600+ (1.4GHz?)out performs a P4 1.8Ghz in a lot of catagories. Sure those stupid clock rate (MHz) tests have a meaning, but people look at it the wrong way. No one seems to take into consideration architecture of the cpus and why a P4 has a faster clock rate than the XPs.

Example:

"Dude!!! I just upgraded from my P4 1.8GHz to a P4 2.0GHz!!! Now my computer must be a lot faster, because the fine marketing team at Intel says it is."

I dare you to try to notice a difference between a 1.4GHz XP and a 1.73GHz XP (or likewise for P4 cpus). It's my challenge to all you ignorant people, (well, the few that are clueless of what I'm taking about). The fact is, I'd buy a P4, not because of the clock rate, but they are better for graphic processing stuff... (too lazy to point out good things about Intel) if only they weren't twice (or more) expensive than the fastest AMD XP... I built my AMD XP 1900+ system for $500. A P3 1GHz system would cost $800 mininum i bet, it's really sad. I actually do think P3s should cost more than P4s, because they are better cpus. Intel should trash P4 and make P3s with high clock rates. Lets look into the eyes of you people that think having a computer with a fast clock rate makes you king. How about a proportion? $190/2.13GHz (AMD XP 2400+) = $450/2.8GHz (Intel P4). Anyone care to do the math? Once AMD gets it FSB up, just imagine the speeds they will reach... Here's an outragous thought, but imagine this... 12.5X multiplier * 533MHz FSB = 6662.5MHz. Obviously nothing could handle this currently, but it goes to show how different the Intel and AMD architecture is.

I really hope there are some people that share my thoughts, i really don't consider myself an "extremist" when it comes to this...

Bigal · Post by **Bigal** » Tue Oct 29, 2002 11:25 pm

Ah yes, every person that understands processor design knows that Intel is trying to fool the public with their long pipeline design. I totally agree that the Pentium III was a much better chip that the current Pentium IV; but it was limited in operating frequency much like our dear Athlon XP. As the process size continues to shrink (next step is 90 nm), speeds and performance will increase, and hopefully voltage levels will drop to lower the overall power consumption.

I too will stay with AMD, and it's not just due to their design practices. I think Intel's marketing and under-handed tricks (paying off individuals to skew their benchmark software in favor of Pentium IV instruction set, etc.) will be their undoing. Love live AMD!

TheJester · Post by **TheJester** » Wed Dec 18, 2002 10:22 pm

well heres the thing Athlon Xp's are based on old tech that was built with a damn good architecture but never ever meant to run as fast as they do AMD liked it so much they just decided to pump it up I myself am converting at the moment I never ever once owned a companys flagship cpu it was always the budget cpu for me but here I am buying an Athlon XP 1700+ T-Bred and throwing out my P4-Celeron 1.7ghz that thing is pure trash and I wont pay up for a p4 I hope to have a good stay in the AMD world who knows I might love it so much and get a hammer but then again those will lack in "ghz" power too I think they plan to be launched @ 2ghz? anyway those are gonna rock

Go AMD Slow down intel

Absolut Talent · Post by **Absolut Talent** » Thu Dec 19, 2002 2:15 am

I am currently running the amd XP 1800+ that I got from their roadtrip giveaway
This is one of the reasons I am gonna stick with amd. The company handed out the free processors, along with a mobo, they desearve my business. They care about their customers

I would like to see Intel giveaway thousands of their new processors across the US.

I also like the fact that AMD is cheaper than intel.

I dont know a whole lot about processors, and I dont claim to be a guru in the field. I am prolly your average computer builder. Price plays a BIG part in when I am building a system. I see an amd 1800 (1.53) and an intel p4 1.5, prices $62/$115 respectively.
Now if I was to rely on the mhz alone, and not look at the architecture or pipeline (hell, i wont lie, i dont even know what those mean), i would go with amd cause it would have the extra .03 mhz and its about half the price.

Ehhh.........amd is the company for me. Long live amd

Pugsley · Post by **Pugsley** » Thu Dec 19, 2002 1:45 pm

wait... you won a CPU at that thing... or was it at last years event?

Absolut Talent · Post by **Absolut Talent** » Thu Dec 19, 2002 3:56 pm

it was at last years events. Thats when they gave away the 1800
this year it was 2400s (which I didnt win at)

MK888 · Post by **MK888** » Thu Dec 19, 2002 4:08 pm

Intel needs to come up with a new name as well.. Is the next chip going to be a pentium V? Pentium means five. I know it sounds stupid, but still......

I guess intel is just going to stick with the name recognition thing for as long as it lasts.

eGoCeNTRoNiX · Post by **eGoCeNTRoNiX** » Thu Dec 19, 2002 4:10 pm

Intel Li *Lacks Intelligence* he he he...

chottoED · Post by **chottoED** » Thu Dec 19, 2002 5:45 pm

show ignorant consumers the right type and amount of advertising and they'll believe anything...
this is one example where Intel's marketing was able to help them pummel the competition... remember the intel dancing bunny men? and then the stupid ass aliens? .. all about marketing

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AMD Could Run Out of Cash by May

AMD Could Run Out of Cash by May

Well.....

Intel's New Name.. he he he...