Going Through The Motions . . .

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AMD lost over a half-billion dollars last quarter.

But that wasn’t the bad news.

They lost that half-billion dollars mostly because people didn’t want to buy their products. AMD took marketshare from Intel in 2006? They gave it all back:

(From here and here:

AMD’s revenue share of total microprocessor market:

2005: 11.1%
2006: 16.1%
4Q06: 15.7%
1Q07: 11.1%

(Mind you, this isn’t the same as unit marketshare, which will be higher, but will probably be much less than it was last quarter, probably less than 20% overall. Also keep in mind, though, that these results are before AMD’s last big round of price cuts, so next quarter, instead of selling fewer units for more money, Green will sell more units for less money.)

But that isn’t even the bad news.

The really bad news was what the AMD execs had to say about all this last night. They really didn’t seem to know what to do other than keep doing what they’ve been doing, just a bit less of it.

To a large degree, they dragged out the old tired buzzwords, as tired as the product lineup, not realizing or maybe not even caring that they’ve become unintentionally hilarious. For instance, after your customers run away in droves, and reluctantly conceding in veiled terms that it was largely your fault, telling the world how good you are with customers you are is pretty funny.

The only practical item they seemed to commit to was that they were going to mortgage those assets not already heavily mortgaged, or sell assets. Outside of some real estate, that looks like selling some or all of Spansion (which used to be AMD’s flash memory division), except they just had a big loss and is selling at an all-time low, too.

They’ll slow down converting Fab30 to 300nm, they won’t hire people (won’t fire more than a handful, either, but among AMD’s faults, overstaffing isn’t one of them), and they’ll try to scrimp and save.

They made a few insinuations to get the stock people excited, like being open to a private equity buyout, or contracting out more fab work, but committed to nothing.

They made a few positive grumbles about K10 and R600, but far fewer than one might expect under the circumstances. If anything, it seemed like target dates for new stuff slipped a bit more.

Maybe the best way to put that conference call in a sentence is that it all seemed like smoke and mirrors from people who really didn’t have anything really good to say and were just going through the motions.

What was most shocking about the results wasn’t so much the loss, anybody sane knew it was going to be bad, but how it happened. A big chunk of their sales volume just vapored like that.

Yes, of course Intel has been pressing them, but really, was it so much worse in Q1? All Intel has been doing is selling older processors fairly cheaply, and it’s not like they started doing that this January. What’s going to happen when C2Ds get cheap and Penryns show up?

It seems somehow unreal that Intel actually did so much damage all of a sudden just doing what they’ve done for the last year or so. It’s like pinking somebody in the forehead and a few times, then seeing them fall to the ground dead after the third pink.

OK, that’s an exaggeration, but there’s no reason to accuse AMD of conspiring to make a profit until Q4 at the earliest, and before then, they’re going to run out of the minimum money they have to have to meet their current loan and other contractual obligations. They don’t seem to know what they’re going to do about that, either.

Maybe I’m seeing things, but there seems to be something very serious and very wrong going on here, more than we know or can surmise.

For the first time, I really doubt AMD is going to make it, at least not in anything like the form it is today. There was something untypically very lifeless behind the words, not quite rearranging chairs on the Titanic, more like “we’re not going to be running the ship much longer.”



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