Thursday, August 23, 2007

The first head to roll

Henri Richard - chief sales and marketing honcho at AMD quit today.

Link 1
Link 2

Sales and marketing will now directly report into Hector. Heads have started to roll at the Jolly Green Giant. When you miss your revenue target quarter on quarter, the first person to blame is your sales guy. Of course, can you blame him if you are obsessed with winning market share even though your current product line up is not competitive enough? A message must be sent - and it starts with Henri.

But what's pretty darn foolish is that Hector is now going to run sales and marketing. Intel must be laughing with glee. Hector now has to do two jobs which means it's highly likely neither will get done well. Or perhaps they're sad because the mistakes Hector has been making over the last few quarters as CEO are worth more to them.

Either ways, this is a signal. AMD needs to scale back their headcount. Another bad quarter or two and either Bob Rivet or Phil Hestor are probably going down. Bob - for constantly mis-leading Wall Street and not managing AMD's cost structure effectively. Phil - for not developing a product roadmap that was competitive enough or perhaps for building an architecture that was too difficult for AMD to manufacture.

I predicted an AMD stock price of 11.50 - 13.00. We're there now people. This is going further south. Over the next 6 months this is going below 11.

Sunday, August 19, 2007

AMD selling assets... this case a big field behind their HQ in Sunnyvale apparently.

I guess that should reduce their Q3 losses by a few million.

Desperate times at AMD. I repeat, they need to cut heads and costs. The way to cut costs is by Hector focussing on key projects and not trying to do everything. Some time ago I had predicted the PIC would die. It actually did - and then foolishly was revived. Hector needs to stop chasing the market share dream as well as the dream of AMD becoming some kind of mammoth platform company in 2008. You're in a hole - don't dig yourself a new one Mr Ruiz. Focus on digging yourself out of this one before you drive AMD into the ground and a lot more innocent employees have to pay the price.

Friday, August 17, 2007

Barcelona continues to have problems

AMD continues to have problems with Barcelona.

What can I say. With a launch that wasn't soon enough and production problems, all they need now is for the performance to be disappointing and they will be toast.

Wednesday, August 15, 2007

Penryn launch date set

Penryn is on track for November 11.

AMD will not have enough lead time in the market with Barcelona to establish a lead. Since the only proof we have of Barcelona's superiority to Penryn is that AMD tells us they're better than the current generation Clovertown, it's unlikely they will have much performance advantage. And possibly be at a disadvantage. As a result, they will not be able to enjoy rich margins on Barcelona as one would expect with a new technology introduction should Intel price Penryn competitively. Which I'm sure they will do because they still want to recover market share.

AMD's Barcelona investments are looking like they will not pay off on the top line as much as they would have liked. Losses will continue for AMD and unless they cut back costs now, I think will continue to be in the range of 200-300 million in Q3.

Thursday, August 09, 2007

AMD continues to borrow

AMD heads back to the capital markets to borrow 1.5 billion through the issuance of convertible notes at 5.75%.

They intend to re-pay the the Morgan Stanley loan as per the conditions of that loan with this money and use the balance for working capital.

This adds more pressure to AMD's financials and their stock price.

Hector and team will have to cut back costs at this rate. I said earlier, they need to scale back to about 15 thousand people. Doing a wimpy lay off of 400-500 people is not enough. As much as I hate the fact that innocent employees will lose their jobs because management wasn't competent enough at their's. I felt the same way when Intel was laying off people.

Tuesday, August 07, 2007

AMD stock heading South

I ranted and raved about how the analysts are pumping up AMD's share price even as it loses money. I had called a trading range of 11.50 - 13.00 in the commentary of one of my posts (can't be bothered to look for it now).

AMD is now trading around $ 12.50. I expect this to go still further South close to 12. Will it drop to should. But at that point it probably starts looking attractive to the private equity guys and there are probably enough interested parties that want to keep AMD afloat so my expectation is it will stay above 11.

It appears Penryn is more than a die shrink.

AMD is in deep trouble as Barcelona still seems to be in some trouble being manufactured and they have not yet allowed the tech sites to publish any independant benchmarks.

However, Intel is also not out of the woods. To accelerate their stock price, they need to grow revenues faster than the market. And their best bets to do this are Silverthorne and monetizing Wimax at the service level and not just the hardware level.