Welcome!

Containers Expo Blog Authors: Liz McMillan, Yeshim Deniz, Elizabeth White, Zakia Bouachraoui, Pat Romanski

Related Topics: Containers Expo Blog

Containers Expo Blog: Article

CEO Calls AMD the Victim of a 'Perfect Storm'

The loss was double what Wall Street anticipated

AMD's first quarter was a disaster.

It's not just that its ASPs were gutted by the price war with Intel, "80%" of AMD's problems were simply shipments, its CEO Hector Ruiz said.

ASPs were only a "small piece" of the picture, Ruiz said, a fact that has a lot to do with Intel's product overhaul. He said it took Intel four years to do it, but "they did a good job."

AMD lost $611 million, $1.11 a share, in Q1 on revenues of $1.233 billion, coming in a bit above the $1.225 billion number it gave out last week when it slashed its forecast from $1.6 billion-$1.7 billion.

The company said its operating loss amounted to $504 million and its gross margin was a piddling 31%, down from 59% a year ago.

The loss was double what Wall Street anticipated.

And AMD's not expecting things to improve greatly this quarter. It's expecting revenues to be flat or, God willing, slightly up. AMD claimed to see some price stabilization and some recovery in the channel at the end of Q1 but it's "still competitive."

The one bright spot AMD could claim was its design-win pipeline, which it described as being as full as it's ever been, but it's unclear when any of that will produce revenue. Yet it thinks it might see market share increases this quarter. It's not too concern with inventory since the pieces are pretty current. "Well positioned in 65nm," it said.

The Q1 numbers include ATI acquisition-related and integration charges of $113 million, or 21 cents a share.

MPUs accounted for $918 million in revenues, including a full quarter of ATI chipset revenues. Year-over-year server and desktop processor units and revenues declined "significantly." Mobile apparently improved "significantly." Graphics contributed $197 million.

In the fourth quarter when AMD started flailing it lost $529 million on revenues of $1.773 billion.

AMD CFO Robert Rivet called the Q1 showing "disappointing and unacceptable" and a "major setback." Ruiz called it a "perfect storm," a combination of competitive products, market complexity and pricing pressure. (Wonder if he remembers how that movie ended.)

Among other things, AMD seems to be undone by the new complexity of the market it complains of. It says it needs to improve the top line and change its cost structure.

The company is now scrambling to reinvent itself, what Ruiz called "accelerating the second half of its transformation" and everything's on the table. The possibilities are "damn near infinite," Ruiz said.

It's pulling together a task force to oversee and implement whatever they come up with.

It's depending heavily on the success of the Barcelona server quad, which should be in products in Q3 and naturally it claims OEMs are delighted with the part. "Barcelona can't come quick enough," AMD said. It's also trying to accelerate its 65nm transition and knows it has to bring 45nm on board as soon as it can.

It's also counting on ATI's next round of 600 Series graphics.

It's simplifying its account management and is hoping to pick up new OEM accounts and broaden its profile in existing accounts. It is also trying to stimulate channel demand.

It's toying with a scheme it calls "asset-lite" to move some of its R&D and manufacturing costs over to partners like it's done with IBM Microelectronics and the Chartered Semiconductor foundry. It's already pulled in its horns on 300mm wafer capacity hoping to save $500 million, a move that will impact it at least into '09, and although it hasn't started laying people off yet, it intends to reduce its workforce and save $100 million on discretionary spending.

AMD is considering moving production of certain products to emerging markets and stratifying existing products. Barcelona, for instance, will apparently produce a desktop chip. It is also looking into monetizing its IP.

More Stories By Virtualization News

SYS-CON's Virtualization News Desk trawls the news sources of the world for the latest details of virtualization technologies, products, and market trends, and provides breaking news updates from the Virtualization Conference & Expo.

Comments (1)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


IoT & Smart Cities Stories
Moroccanoil®, the global leader in oil-infused beauty, is thrilled to announce the NEW Moroccanoil Color Depositing Masks, a collection of dual-benefit hair masks that deposit pure pigments while providing the treatment benefits of a deep conditioning mask. The collection consists of seven curated shades for commitment-free, beautifully-colored hair that looks and feels healthy.
The textured-hair category is inarguably the hottest in the haircare space today. This has been driven by the proliferation of founder brands started by curly and coily consumers and savvy consumers who increasingly want products specifically for their texture type. This trend is underscored by the latest insights from NaturallyCurly's 2018 TextureTrends report, released today. According to the 2018 TextureTrends Report, more than 80 percent of women with curly and coily hair say they purcha...
The textured-hair category is inarguably the hottest in the haircare space today. This has been driven by the proliferation of founder brands started by curly and coily consumers and savvy consumers who increasingly want products specifically for their texture type. This trend is underscored by the latest insights from NaturallyCurly's 2018 TextureTrends report, released today. According to the 2018 TextureTrends Report, more than 80 percent of women with curly and coily hair say they purcha...
We all love the many benefits of natural plant oils, used as a deap treatment before shampooing, at home or at the beach, but is there an all-in-one solution for everyday intensive nutrition and modern styling?I am passionate about the benefits of natural extracts with tried-and-tested results, which I have used to develop my own brand (lemon for its acid ph, wheat germ for its fortifying action…). I wanted a product which combined caring and styling effects, and which could be used after shampo...
The platform combines the strengths of Singtel's extensive, intelligent network capabilities with Microsoft's cloud expertise to create a unique solution that sets new standards for IoT applications," said Mr Diomedes Kastanis, Head of IoT at Singtel. "Our solution provides speed, transparency and flexibility, paving the way for a more pervasive use of IoT to accelerate enterprises' digitalisation efforts. AI-powered intelligent connectivity over Microsoft Azure will be the fastest connected pat...
There are many examples of disruption in consumer space – Uber disrupting the cab industry, Airbnb disrupting the hospitality industry and so on; but have you wondered who is disrupting support and operations? AISERA helps make businesses and customers successful by offering consumer-like user experience for support and operations. We have built the world’s first AI-driven IT / HR / Cloud / Customer Support and Operations solution.
Codete accelerates their clients growth through technological expertise and experience. Codite team works with organizations to meet the challenges that digitalization presents. Their clients include digital start-ups as well as established enterprises in the IT industry. To stay competitive in a highly innovative IT industry, strong R&D departments and bold spin-off initiatives is a must. Codete Data Science and Software Architects teams help corporate clients to stay up to date with the mod...
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
Druva is the global leader in Cloud Data Protection and Management, delivering the industry's first data management-as-a-service solution that aggregates data from endpoints, servers and cloud applications and leverages the public cloud to offer a single pane of glass to enable data protection, governance and intelligence-dramatically increasing the availability and visibility of business critical information, while reducing the risk, cost and complexity of managing and protecting it. Druva's...
BMC has unmatched experience in IT management, supporting 92 of the Forbes Global 100, and earning recognition as an ITSM Gartner Magic Quadrant Leader for five years running. Our solutions offer speed, agility, and efficiency to tackle business challenges in the areas of service management, automation, operations, and the mainframe.