As I had predicted, AMD has laid off 430 people or as they say 2.6% of their workforce.
Link
However, this is probably not enough and they will need to bring their employee base down closer to 15k people from the 16.5k they had post the ATI merger very quickly.
AMD also filed their 10Q today. While we already calculated the true loss to the CPU biz, it also reveals a 10% decline in ASPs.
Link
AMD management is handing out some blatant horse's manure. At the analyst call they said inadequate supply to channel and that the Q1 inventory build up was desired. Huh - if they had inadequate supply, why is it Q406 inventory was stable at the same level compared to the period when AMD was selling out and make solid profits. You can read more about my assessment on the inventory:
here...
Essentially, AMD is seeing soft demand because they have non competitive parts and by pulling the Pentium brand down the pricing stack Intel has made it difficult for them to sell even when they are almost giving the product away for free.
What baffles me is how the Wall Street hucksters continue to prop the stock up at 13.50+. But I guess the guys who bought at 40 have no choice but to pour good money after bad to try and keep their investments afloat for as long as possible.
Q2 - expect AMD to lose a big dollop of change again. Not as much as Q1 but probably half or a little more than half of their Q1 loss.
4 comments:
no amount of firing people will allow AMD return to profitability without the affecting its capability to ship enough volume. When you have volume demand equal to less than 2 Fabs, you're losing significant cash everyday. AMD's 2nd Fab is hurting its margins significantly. Just look at AMD's 10Q report. I discussed this way back in 2006 at Scientia's blog but he dismissed my argument. Oh well...
Hey 180, whats going on with amd's stock ? .. it rose 0.68c today;
This may be part of the answer on their stock price:
http://www.theinquirer.net/default.aspx?article=39548
Personally, I think the stock price is being propped up for the time being by all the clever Johnnie's on Wall St who bought AMD at 20$ + and now will try and hold the price up as long as they can (probably till Q2 results) in the hope of some indications that AMD's fortunes are reversing. Which will then allow their analysts to upgrade their rating at which point Joe Shmoe will jump in to buy and our Wall St Johnnies will dump their shares and walk away.
"Just look at AMD's 10Q report. I discussed this way back in 2006 at Scientia's blog but he dismissed my argument. Oh well..."
Let me guess he probably made some argument that "that is when APM will really kick in" (although he has no clue what APM actually does).
I completely agree - AMD needs 2 fabs running at >80% utilization and there are a couple of issues with this:
1) they have guaranteed some capacity to Chartered, so regardless of internal fab loading, they still are outsourcing.
2) It will be a while before they can shift any GPU/chipset production to internal capacity as their process is different than TSMC. If they could somehow do this then they would be able to load their fabs at least with graphics parts when CPU demand is low. The only problem with this approach is if CPU demand does increase they do not have overall capacity then to support GPU/chipset (like Intel can) and it doesn't make sense to maintain a design on low margin parts for 2 different processes (TSMC and AMD).
So the real question is why are they not shifting GPU/chipset to Chartered so they could also use internal capacity when needed?
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