Free Love

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Spring in the Northern Hemisphere has sprung a certain kind of article along with the traditional AMD loss: the “free love” article.

Though it usually takes a lot longer than this, it can be summarized as “We don’t want AMD to fail/don’t think AMD will fail because . . . it would be bad for me/us/the industry.”

How sweet. How ludicrous.

It’s ludicrous because for it to make any sense, you have to believe that you can somehow mystically prevent unhappy endings by thinking happy thoughts about them. Wishful thinking become reality.

Really, if wishful feelings changed the world, why is Microsoft not dead?

There is no doubt that an AMD-less world would bring little joy to those outside of IntelWorld and shareholders. Prices would go up, indeed, they already have gone up in those areas where AMD no longer competes.

There is no less doubt that computer media would be hurt for no other reason than its hard to get anyone excited about a game played by one team.

These are very good reasons for all interested parties to not like the idea of AMD extinction. But it is no reason at all to say why it can’t happen.

We said recently that AMD has fallen and will be unable to get up again on its own. For them to get up on their own, they’re going to need billions in bailouts, one way or another, directly or indirectly, from somebody.

For instance, within a year, AMD will have to come up with $2 billion+ if it wants to build that New York State fab. Billions of dollars, not happy wishes.

AMD will not make $2 billion in profits the rest of the year; indeed, it’s hardly more likely they’ll make $2 in net profits the rest of the year (and no, the “operational profit” AMD execs are promising isn’t that; mark yourself owned if they fooled you into believing that.)

We’re in the middle of a financial crisis due mostly to no one knowing who lost what in shaky loans to shakier borrowers. Even AMD has said (very quickly in passing) that it can’t expect any conventional loans any time soon.

One could raise money by selling stock, but AMD stock fell down and can’t get up, either; it’s been trading in the $6ish range, which means they would have to sell so much additional stock that it would severely dilute the value of current AMD stock.

Right now, AMD doesn’t need free love. The only loving AMD can use right now is spelled C-A-S-H.

I’ve heard the thought floated around that the OEMs won’t let AMD fail because it would be bad for them if it did. Well, gee, if the OEMs were so concerned, they could fix this problem right away by just paying AMD more for their chips. If anybody wants to hold their breath waiting for that, please send me an email with your name and the name/address of your funeral director.

You could do your part, too. If you like AMD and want to support them in these dark days, show it the next time you buy a CPU. No matter what you buy, write AMD another check for $50 and mail it directly to them. What’s $50 when AMD’s survival is at stake? It won’t be tax-deductible, but I’m sure they’ll take it. If AMD got an extra $50 a CPU for everyone, they’d be in good shape. Indeed, it would be very fair to say that the ultimate goal of all these lawsuits and legal actions is to get AMD $50 more a CPU. That’s the only way AMD will ever become a healthy company.

I think I just created an excuse engine. 🙂

My point to all this is that this company is in trouble! I’m not saying they’re doomed, but they could fail if the breaks go against them, or even if it’s 50/50.

Now you can dislike that idea all you like, but if you learn anything from this, learn that your wanting something to happen is no reason to think it will happen.

Ed


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