So much for only losing $200 million this quarter. At face value, AMDlost $1.19 billion this quarter, on revenue of $1.35 billion. The biggest loss (and biggest change) since last week was that for the second time AMD has taken a write-down on ATI, this time to the tune of $876 million. In the present-term this is a correction of the value of ATI within AMD’s books, but it’s also ongoing proof that AMD paid too much for ATI.........
AMD lost $1.19 Billion this quarter = WTF !!!!
Ok..... someone tell me this is not true....... in the past quarters, AMD lost in the range of a couple to few million..... BUT.... "Billion"????? come on.......
anyone got more understanding on this??
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From the same link:
...The bit of good news here is that write-offs are not the same thing as actually losing money (even though they are calculated against net income), so AMD isn’t $1.19 billion poorer (not that they could afford to be). Real (operating) losses are around $275 million before factoring in AMD’s one-time sale of old 200mm manufacturing equipment, after which operating losses drop to $143 million, a far more minor hit against what cash AMD still has. Furthermore this means losses are reduced compared to Q2 of last year, a positive sign for the company...
I am no businessman , can someone tell me the difference between face-value, write-offs, and operating loss?
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From the same link:
...The bit of good news here is that write-offs are not the same thing as actually losing money (even though they are calculated against net income), so AMD isn’t $1.19 billion poorer (not that they could afford to be). Real (operating) losses are around $275 million before factoring in AMD’s one-time sale of old 200mm manufacturing equipment, after which operating losses drop to $143 million, a far more minor hit against what cash AMD still has. Furthermore this means losses are reduced compared to Q2 of last year, a positive sign for the company...
I am no businessman , can someone tell me the difference between face-value, write-offs, and operating loss?
I'm no expert but...basically, their estimations were way off so the corporation owes investors. That money is called write-offs. Operating loss is how much money was actually lost without figuring the speculative values (quarterly estimates). Face-value is how much every share is worth right now.
As I been saying since Core 2 hit the shelves, AMD is in serious trouble. If their next product isn't a competitive one and the world doesn't gobble it up fast, AMD's days are numbered. I don't know if someone else would buy AMD out because it is too risky.
Google lost 10% of its value and Sony Ericson is having to cut 2000 jobs too. The only real winners this quarter were Microsoft and IBM.
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Considering Sony makes $77 billion annually compared to AMD's $6 billion, AMD is in much, much worse shape. AMD is hanging on by a thread at this point.
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A few things here.
1. AMD paid WAY too much for ATI, and is suffering from the delta between the cost of aquisition and sales. This is typical under a merger type environment vs. an outright buy of a much smaller company, and will impact the bottom line for a period of 2-5 years.
2. AMDs market share and profit per unit is down due to Intel's release of newer technology out of newer fabrication facilities, which AMD is having to pay for now in order to stay in line. This also is typical of a smaller vendor having to liquidate older technology and having to purchase newer technology in order to keep up with a much larger competitor.
3. The ATI/AMD process integration is not going as well as expected, even under the reduced expectations published earlier. Purchasers of AMD processors seem to be more prone to adopt the SLI vs the Crossfire standard, thus forcing one segment of the company to utilize external chipset and GPU vendors in direct competition with their internal GPU processes and products.
4. ON average, no ones stock is doing well during the present downturn. Larger corporations with less debt will do better than smaller ones with larger debt.
AMD is paying way too much in debt servicing, and getting way too little return, so the market capitalization has gone down tremendously. As of Friday they're down over 12% on the day. If I had a few grand of high risk capital available I'd probably buy them at the sub $5/share level they are at.....I may have to look at freeing that up. The downside on this stock is low, but the upside over a period of a few days (for you day traders) or over a period of a couple of years, could be very good. THEY ARE NOT GOING OUT OF BUSINESS, BUT SOMEONE ELSE MAY END UP OWNING IT.
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What do they offer that another corporation would want though? There really isn't anything positive in a buyout of AMD. They would incure a lot of debt right off the bat to overhaul fabs and clean up the management. They would also not see a competitive product for five or more years. I think what could happen to AMD is the same as what happened to Diamond back in the day. They file for bankruptcy, a corporation buys up the left overs, and they start over from scratch. Obviously, all the deals the supreme court brokered AMD would be lost and it is very unlikely they could ever make a come back.
I don't think VIA has enough money right now but I suspect they would be one to jump on the deal if it were a viable option.
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Ford,
I think you misunderstood what I was trying to say. It won't take them 5 years to come up with a competitive product, just that they will be paying for the aquisition for 2-5 years....totally different.
I remember when Diamond Multimedia went "under", but they never really did. The technology was purchased and continues to this day to flavor offerings from the GPU manufacturers. Some times when you are too small or too early to market, you can get a major burn. I don't think AMD is in the same basket.
As I DID state, it is a high risk investment, but with a major upside with a minimal downside. I remember when I had an oportunity to buy into eBay at the IPO, but didn't as it was too risky.....DOH!!! $14 - 300+ over a period of a few months, all for a company that had only showed a $7000 profit for one month.
AMD is much better positioned than they where.
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Ford,
I think you misunderstood what I was trying to say. It won't take them 5 years to come up with a competitive product, just that they will be paying for the aquisition for 2-5 years....totally different.
I was talking about if AMD was liquidated and had to start from scratch again. I wasn't talking about ATI in any way.
Gerritt said:
I remember when Diamond Multimedia went "under", but they never really did. The technology was purchased and continues to this day to flavor offerings from the GPU manufacturers.
They had many original products back in the early 1990's. What they do now is nothing extraordinary--basically just a third party manufacturer for AMD-based video cards. They really aren't doing any innovating anymore except that SLI/Crossfire thing where they enabled Crossfire on an SLI board. The legalities would stop that from going anywhere anyway.
Gerritt said:
Some times when you are too small or too early to market, you can get a major burn. I don't think AMD is in the same basket.
Diamond got burned after merging with S3 just like 3dfx got burned not long after merging with STB Technologies. The result of both mergers were sub-par products leading to their demises. History repeats...ATI could very well be AMD's end.
Gerritt said:
As I DID state, it is a high risk investment, but with a major upside with a minimal downside. I remember when I had an oportunity to buy into eBay at the IPO, but didn't as it was too risky.....DOH!!! $14 - 300+ over a period of a few months, all for a company that had only showed a $7000 profit for one month.
AMD is much better positioned than they where.
AMD has a ton of baggage, consumers support waning, and all at the time of an economic downturn. eBay had none of the above.
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Ford,
I have to disagree with you on the subpar products.
Almost if not all of the folks you mentioned had great technology in the pipe when they went under. It is the uptake, and longterm support of these products as well as their capability to bring the technologies to market when they where NECESSARY that spelled their individual dooms.
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"In the pipe" doesn't bring money in, only loses it. That is what AMD is doing right now with Bulldog and their other future releases. Bulldog could sustain or break AMD. I excluded "make" in that statement because even if it is great, it has less than a year before the next round of Intel processors comes out. Any excellent product from AMD will be met with limited acceptance unless they can best Intel for at least the next five years. That doesn't seem likely at this point.
AMD does have a lot of options on the table because of their size (sell of ATI, downsize, sell of fabs, etc.) so it will take a long time for it to deteriorate to the point they would file for bankruptcy but, remember, this started two years ago already and their shares fell in value eight-fold since then. The future looks bleak to say the least.
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The majority of the loss was caused by writing off about ~$900M "ATI goodwill"... goodwill is bean counters way of trying to attach a monetary value to something which is not tangible but must be taken into account when trying to figure out the real value of something like a corporation. "ATI goodwill" is essentially brand recognition and customer loyalty that comes along with being able to stamp an ATI sticker on new products developed after the acquisition. $3.2B of the ATI acquisition was "ATI goodwill".
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What do they offer that another corporation would want though? There really isn't anything positive in a buyout of AMD. They would incure a lot of debt right off the bat to overhaul fabs and clean up the management. They would also not see a competitive product for five or more years. I think what could happen to AMD is the same as what happened to Diamond back in the day. They file for bankruptcy, a corporation buys up the left overs, and they start over from scratch. Obviously, all the deals the supreme court brokered AMD would be lost and it is very unlikely they could ever make a come back.
I don't think VIA has enough money right now but I suspect they would be one to jump on the deal if it were a viable option.
I think the biggest thing they have that someone else might want is their licence to build x86 chips... although if thats all you wanted it would probably be cheaper to just buy out VIA instead.
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, can someone tell me the difference between face-value, write-offs, and operating loss?
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