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AMD Lost 400 Million in Q1: Only Has 1.2 Billion In Cash Reserves
- Thread starter ByLoSellHi
- Start date
First of all, you are posting on an AMD thread, not INTC.
You're right, INTC is a relatively stable, 'blue chip' type of stock, which fluctuates about as much as most other blue chip stocks, which is not much. It has a current 52 week range of 16.75-$22.50.
So? What does this have to do with AMD and the opening article?
AMD's fluctuated 12.60-$34.96, which is pretty typical of AMD year after year... wild rides, huge option profits due to massive volatility. AMD is down, this is discussion worthy... is Intel interesting? Not really. It's the investment equivalent of watching paint dry.
You're right, INTC is a relatively stable, 'blue chip' type of stock, which fluctuates about as much as most other blue chip stocks, which is not much. It has a current 52 week range of 16.75-$22.50.
So? What does this have to do with AMD and the opening article?
AMD's fluctuated 12.60-$34.96, which is pretty typical of AMD year after year... wild rides, huge option profits due to massive volatility. AMD is down, this is discussion worthy... is Intel interesting? Not really. It's the investment equivalent of watching paint dry.
Quote from demoship:
hels, I was posting in response to the comment about AMD taking a hit on their bottom line to hurt INTC's bottom line more.
I was saying that INTC didn't really get hurt, and they're maintaining profitablility while AMD fucks themself over.
You flipped that statement around. I never said AMD voluntarily took a hit to their bottom line to hurt Intel. I said Intel took the hit to hurt AMD.
AMD is the underdog, but it's fast gaining market share... since there's only 2 players, whatever 1 gains, the other loses. This is part of the reason why Intel's bottom line is 30% smaller than it was 2 years ago. That and the price war.
Right now is a pretty important time for both of them. China's market is going to be vast, and the average Chinese household does not have their own computer, they mostly use internet cafe's. But those internet cafe's are THE place to go in China for all ages. The computing age is only starting there, something we forget because every household here has 3 pc's.
Owning personal PC's nationwide there is coming, as their economy grows, and this market will be split between Intel and AMD... there's no one else in the playing field.
Odds are good it's not the high end quads or even dual core market that will be fought over, but the cheaper low end systems that are most popular in the US for around $500 or even less. That market is potentially vast, and no pc maker can ignore it... and it's all about price. AMD's biggest market share is the lower cost computers.
I think that's why AMD wants to invest in their capacity now, and why Intel doesn't want them to be able to.
HOW is Intel hurting their own bottom line? Well, do you think the demand for PC's has dried up over the last 2 years? It hasn't.
So why don't you tell me why Intel's 30% down on their bottom line if not through aggressive price cutting to beat AMD and loss of market share? Is there another reason I overlooked?
Well, no, it hasn't been... because AMD did in fact take that market share from them, and depending on AMD's ability to finance their way out of the hole they are in, will continue to do so, as the developing and emerging nations computerize.
I don't have inside info on AMD, but if I were them, I'd do what they did, stick their necks out NOW to do what it takes to increase capacity, knowing what's coming down the pike, and how much a lead Intel has in capacity. Damned the cost. Beg borrow and steal to do what it takes to increase their capacity. They have a hellava innovation team, but they have not been able to keep up with production demand very well and they need those new chip plants.
If I were Intel, I'd do what they're doing... everything they can to beat AMD into the ground now, before they can mobilize for better production. I'd take whatever hit it took to take AMD down financially, call in every favor, to deny AMD the cash to build.
I don't know how either company sees it internally, but the outcome will be interesting.
I don't have inside info on AMD, but if I were them, I'd do what they did, stick their necks out NOW to do what it takes to increase capacity, knowing what's coming down the pike, and how much a lead Intel has in capacity. Damned the cost. Beg borrow and steal to do what it takes to increase their capacity. They have a hellava innovation team, but they have not been able to keep up with production demand very well and they need those new chip plants.
If I were Intel, I'd do what they're doing... everything they can to beat AMD into the ground now, before they can mobilize for better production. I'd take whatever hit it took to take AMD down financially, call in every favor, to deny AMD the cash to build.
I don't know how either company sees it internally, but the outcome will be interesting.
Quote from hels02:
Well, no, it hasn't been... because AMD did in fact take that market share from them, and depending on AMD's ability to finance their way out of the hole they are in, will continue to do so, as the developing and emerging nations computerize.
I find that statement prophetic. Here is a recent fact if you wish to look at things that way. INTC did in fact take Market share from AMD.
The ATI acquisition was a bad business decision at the price they paid. ATI had to OUT bid the competition substantially to get big OEM orders. Trying to merge the two company cultures while fighting these other battles means that managing the merge will not be given the attention required to make it work. With the low margins ATI was working with, a hick up here results in writeoffs.
AMD needs some cash, the options they have, due to current debt finance covenants, all point to lower price per share.
The AMD that AMD wanted to be can no longer be accomplished. AMD will now have to become something different to survive or they perish.
Quote from hels02:
I Remember, they still own ATi? If anyone actually looks at their financials, the REASON they are losing money is because they BOUGHT ATi, the best graphics hardware company on the planet. What did ATi cost AMD? $400 million. hrm.
So AMD is 'going broke'... to the exact tune of ATi's cost. Is ATi going broke? I don't think so, and ATi's bottom line will be added to AMD's next year. Hrm.
There is no relationship between purchase price of an acquisition and operating losses. One hits the balance sheet and the other hits the income statement. If it was an asset sale they will have some depreciation expense on the income statement, but it will amount to a small amount of the 400 million, and if it was a stock sale they get no additional depreciation expense based on the acquisition price. Depreciation continues at the same rate it was for the acquired company. They can write off goodwill which would also be a small amount in relation to the 400 million.
Quote from ifinitis:
Quote from hels02:
Well, no, it hasn't been... because AMD did in fact take that market share from them, and depending on AMD's ability to finance their way out of the hole they are in, will continue to do so, as the developing and emerging nations computerize.
I find that statement prophetic. Here is a recent fact if you wish to look at things that way. INTC did in fact take Market share from AMD.
The ATI acquisition was a bad business decision at the price they paid. ATI had to OUT bid the competition substantially to get big OEM orders. Trying to merge the two company cultures while fighting these other battles means that managing the merge will not be given the attention required to make it work. With the low margins ATI was working with, a hick up here results in writeoffs.
AMD needs some cash, the options they have, due to current debt finance covenants, all point to lower price per share.
The AMD that AMD wanted to be can no longer be accomplished. AMD will now have to become something different to survive or they perish.
Everyone wants to paint this in black and white, but it's not that clear cut.
Under the current market conditions, I don't see how anyone can believe AMD will 'perish' anymore than the US economy will 'perish' because we're in debt. Unless I'm misunderstanding what 'perish' means in this context.