Too Terrible To Contemplate? . . .

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There’s been a lot of bad news about AMD this year, but a lot of people don’t want to hear it.

I’m not talking about fanboys, but those who essentially say, “My God, AMD’s got to pull through, because if they don’t, that would be bad for me!” (OK, they usually say “us” but it boils down to the same thing.)

We spoke a couple months ago what an AMD-less world would be like, and while it wouldn’t be a disaster, it certainly would be worse for the average CPU buyer: higher prices and a slower pace of innovation.

It’s not a pleasant thought, but life often isn’t, and you shouldn’t let unpleasant thoughts skew your thinking, and “I don’t want it to happen” should never be the reason to decide, “It’s not going to happen.”

You also ought to keep in mind that while prices will go up if AMD goes down the tubes, they’ll also go up if K10 proves to be tremendous, too. The whole reason for the gloom and doom is that AMD isn’t getting paid enough for what they’re making today, so this is not an unmixed blessing.

When To Start Seriously Worrying

Right now, based on what we know, things don’t look good for AMD. That’s not a euphemism for “definitely doomed,” it means just what it says.

The problem is that there’s so much we don’t know, either positive or negative, on so many fronts, financial and technical, that trying to figure AMD out is like trying to figure out Iran or North Korea. Almost the only thing you can guarantee is that you’re going to get blind-sided by them a few times.

It’s not just a matter of being left in the dark, some powerful and maybe decisive factors are not only unknown by us, but unknowable by anybody, because they haven’t happened yet. Do you know what AMD’s stock price will be six months from now? It could be 53, it could be 3, I could give you a decent argument for either, pretty much depending on how good some future stepping might be.

A few months from now, some private equity guy might see something in the paper and say to himself, “Hmmmm, maybe I should look into buying AMD,” and does just that a couple months after that. How can you predict something like that?

All one can do is gather whatever evidence becomes available, knowing full well that some surprise event can change the whole picture dramatically, either positively or negatively.

It can be said, though, that if AMD doesn’t get some major, serious good-time news (K10 ends up being really good and/or AMD gets some form of fiscal relief which doesn’t entail being ripped and stripped), by late next January, this company is going to be in deep doo-doo.

How likely is that? Who the hell knows? This company might look wonderful six months from now; it might just as likely be in its death throes. Neither extreme is too likely, but you can’t preclude either,

We’ll just have to wait and see and mostly not know.

Ed


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