Tuesday, May 09, 2006

Intel the chapter 11 candidate

"Are you nuts?"

"No, check out Intel's balance sheet."

Cash+cash equivalent: $3.948 billion
Short-term investment: $3.906b
Trading assets: $1.265b
Accounts receivable: $3.912b
Deferred tax assets: $1.032b

Total: $14.063 billion

Bills and other money that must be paid now: $9.843 billion

$14.063 - $9.843 = $4.22 billion, that's all the money Intel can count in the bank. Now, the IRS has ruled that Intel owes Uncle Sam $2.2 billion in taxes from 2001 to 2005. If Intel fails to prevail over IRS, then $2.2 billion + interest is about $2.5 billion Intel must pay.

$4.22 - $2.5 = $1.72 billion would be all that is left...but, Intel also has $2.6 billion of debt.

With a few bad loss quarters (which should start from 3Q06 onward), Intel may have to liquidate some of its FABs to come up with the cash needed for workers' salaries and debt payments.

Then comes 2008, Intel has 97.5% chance of losing the anti-trust lawsuit...

28 Comments:

Anonymous Edward said...

This is too wild a prediction. Intel's CPU business may be having a few bad quarters or even a few bad years, but the company is far from going down. It is still spending a lot on all other fronts and contributing quite much to the academic/research community. It's actually very easy for the company to cut expenses if "survivability" (instead of growth) is at stake.

Also, the government will never let such a big company go chapter 11 by demanding taxes from it. Intel probably made their finance look worse in order to avoid paying the taxes...

8:42 AM, May 10, 2006  
Anonymous Anonymous said...

Yes. You are crazy. Intel brand is worth more than 20bln, fabs are worth another 30bln and Intel is hiring new people to have 100,000 soon.
Simple math doesn't work, because shareholders and Intel management are able to do a lot to keep this company alive and kicking.
This was called comunism when inefective companies where able to survive in monopoly because they had to. Intel is like Microsoft, like IBM and others - they are worth so much that a lot of people depends on it. Financial banks, shareholders cannot afford to loose on Intel.

11:14 AM, May 10, 2006  
Anonymous Anonymous said...

Sharikou. The balance Sheet of AMD during the late 90's and early 00's looked worse, and yet, here they are.

What makes you think intel will go down?

12:10 PM, May 10, 2006  
Anonymous Anonymous said...

I hope Intel doesn’t completely implode. AMD still needs to have a competitor in the long run!

1:12 PM, May 10, 2006  
Blogger Sharikou, Ph. D said...

Intel brand is worth more than 20bln, fabs are worth another 30bln and Intel is hiring new people to have 100,000 soon.


Pentium brand worths 0. CORE brand is not proven. Intel brand is in doubt. Most of Intel's FABs are junk. Only four are 90nm or 65nm.


The balance Sheet of AMD during the late 90's and early 00's looked worse, and yet, here they are.

Yes. AMD almost BKed. Had Intel started dumping flash in 2001, AMD would have BKed.

I didn't say Intel would go BK for sure. It all depends on Intel's next gen chips now. They better are as good as claimed to be and Intel better deliver more than 20% on launch. Otherwise, Intel's chances of going BK will be quite substantial.

2:11 PM, May 10, 2006  
Anonymous Anonymous said...

I didn't say Intel would go BK for sure. It all depends on Intel's next gen chips now. They better are as good as claimed to be and Intel better deliver more than 20% on launch.

No. It doesn't matter.
Opteron is faster than Xeon for 3 years and was able to grab 13% of the market after all (average, not just Q1 2006).
Intel is and will be bigger at least 6-8 years. Because AMD is able to take 35% of the market - this is the best option. The rest must be in Intel hands. Because of the fabs, famous brand, more people and investors involved etc. And I wish AMD the best!

4:23 PM, May 10, 2006  
Anonymous Anonymous said...

To the second poster:
While I disagree with Sharikou on this subject, I doubt Intel is hiring more employees. According to Paul O, Intel is currently restructuring, and he believed laying off is necessary.
You should check the news more often.

5:03 PM, May 10, 2006  
Blogger Sharikou, Ph. D said...

Opteron is faster than Xeon for 3 years and was able to grab 13% of the market after all

True. But, after AMD's lawsuit against Intel last June, Opteron sales jumped overnite. It's now 27% of x86 server revenue. Once Intel's illegal activities are curtailed by law, it has to face fair competition on product merit. AMD's 1Q06 was capacity constrained, even so, INTEL's 1Q06 revenue dropped signifigantly from 1Q05 in a growing PC market. Intel was stuffing the channel to take 1Q06 numbers. 2Q06, Intel will be even worse, and 3Q06 will be worse still. And, AMD is ramping up production.

Unless Intel deliver Conroe with leading performance and good availability by 4Q06, it will be game over. AMD's 65nm parts will be super strong. And AMD will be able to supply 50% of the market.

5:22 PM, May 10, 2006  
Anonymous Jeach! said...

It's hard to predict who (if any) will go bankrupt. It's hard to predict who will have the better product a year from now... but this much I do know:

1) AMD is the little guy who reinvents itself and CAN inovate.

2) INTEL is the big guy who has had everything handed to them, mostly by playing unfair.

Given those two facts, I believe the one company to fall will be the one which fails to execute or makes the next crutial execution error.

If the past is any indication of the future, my bets are on Intel to screw things up, because:

a) They had to rush new architectures and designs to market.
b) They have to rush to update & build new 65nm and 45nm capacity.
c) In order to produce 20% Conroes, they have to convert their FABs.
d) New chipsets are now needed.
e) Distracted by the Itanium mess.
f) New 'component based' branding (confusing everyone).
g) etc.

I could keep going on and on.

But as for AMD, if anything they have breathing room financially and technologically.

9:41 PM, May 10, 2006  
Anonymous Anonymous said...

1) AMD is the little guy who reinvents itself and CAN inovate.

No. AMD is not a little guy anymore.
If you notice - the capacity will not be able to stop AMD to take over a lead in a few years. As I've written before Intel will be the leader, but sizing chips to 65/45nm means that using only one FAB36 AMD will be able to satisfy 50% of the market. Another fab - another 50%.
The only driver is the engineering, bandwidth (HT) etc. and AMD is a leader. But there are also intel bastions (Dell), people who don't belive in AMD (IBM Server guys) and consumers who still belive in Intel brand.

10:13 PM, May 10, 2006  
Anonymous Anonymous said...

I've got a design for a 20Ghz CPU, I'll be the next Intel, please believe me... no! I don't want to go back to therapy, go away.. Ok Paul back into your padded cell..

3:36 AM, May 11, 2006  
Anonymous Anonymous said...

Umm, i have been watching extremesystems forum and Conroe is badly beating K8 clock for clock and overall. Solid job for a chip with 4 gen old tech. AMD will prolly file chapter 11 themselves - hard to live when you know that 1994 tech chip is owning your own ones.

8:11 AM, May 11, 2006  
Blogger Surya said...

I am looking forward to see what conroe is able to do. See the thing is AMD has a decent lineup but that lineup is coming out in end of 2007 and 2008!! That is too far into the future to counter Intel's attack IMHO and that is going to hurt AMD without a doubt. I dont think AMD is in in THAT great of a position once they see that the Conroe really is a a super fast chip. No offense Sharikou but the things you are posting about Intel going bankrupt are quite lame IMHO.

8:31 AM, May 11, 2006  
Anonymous Anonymous said...

It's hard to see Intel going bankrupt, as much as I'd enjoy it. Companies usually declare bankruptcy not because their liabilities exceed their assets, but because they don't have enough cash for operations. If Intel is in really bad shape, its creditors will probably let Intel negotiate to restructure its debt without filing for Chapter 11.

10:31 AM, May 11, 2006  
Anonymous Anonymous said...

To call a Conroe chip a "chip from 1994" is a huge disservice. The chip might share a superficial resemblence to a Pentium Pro, but it is all new from a circuit design standpoint and high level microarchitectural standpoint. You cannot easily "bolt on" decoders and execution units! Same with comparing a K8 to K7 - all new.

11:16 AM, May 11, 2006  
Anonymous Anonymous said...

Sharikou, could you provide a link or reference regarding the IRS tax claim against Intel. Thank you.

8:23 PM, May 11, 2006  
Anonymous Edward said...

You cannot easily "bolt on" decoders and execution units! Same with comparing a K8 to K7 - all new.

My knowledge on this is the opposite - CPU designers tend to reuse a fair amount of old circuits in their newest products for the following reasons:

(1) It is too complex to validate a whole new chip.
(2) Good circuits are designed with modularity in mind.
(3) Since P3 (e.g. Athlon), CPU architecture improvements have been incremental; that is even true from P3 to P4.

Well, but compared to P-Pro, of course Conroe is a lot improved. After all, there are 12 years in between. :-)

10:13 PM, May 11, 2006  
Anonymous Anonymous said...

Sharikou,

Sometimes I feel you are really absurd with your blog posts. Can you honestly tell us that you don't get any money from AMD??

You sure can have your favorite, but diminishing its rival won't make you an honorable man. In fact it's real low for a grown-up to curse and damn one company like you do.

Why didn't AMD purpose any performance duel when it's still no-P4 age? What did you do then? Pursuing your phd with AMD scholarship??

4:40 PM, May 12, 2006  
Blogger Sharikou, Ph. D said...

Can you honestly tell us that you don't get any money from AMD??


Why don't you ask Intel to sue me and do the discovery?

Intel is vicious monopolistic power, a reactionary force that is wasting world's resources and impeding the advance of 64 bit computing. You should be glad that it is losing the game.

8:03 PM, May 12, 2006  
Anonymous Anonymous said...

"Intel is vicious monopolistic power, a reactionary force that is wasting world's resources and impeding the advance of 64 bit computing. You should be glad that it is losing the game."

Do you seriously think that AMD would be better if they were in Intel's shoe?? If you say that Intel is wasting world's resources, what about AMD before P4 time?? They were impeding the advance of 32 bit computing at that time, but of course they didn't have any capability to waste world's resources. Then they shamelessly copied Intel's P6 marchitecture.

In summary, Intel might had taken the wrong way for several years, but they didn't intend to waste world's resources. AMD's no saint, I can tell from them bitching about dual-core duel.

One last thing, I only can see Intel is coming back and winning the game. I got insider news that Woodcrest beats up Opteron280. So wait till you see real benchmarks, save all you pre-school math like 80% of 50%.

11:39 PM, May 12, 2006  
Blogger Sharikou, Ph. D said...

Do you seriously think that AMD would be better if they were in Intel's shoe??

You can't accuse people for something that they may do in the future.

Frankly, I think the stuff Intel is doing: the Skype cheat, the IDF benchmarketing, the Guerilla benchmarketing where a slower harddisk was used for the AMD system...was bordered on fraud.

However, if you look at how Intel defraud the court and jury in the 286 microcode trial, it is not a surprise. It's Intel's character or corporate culture.

8:13 AM, May 13, 2006  
Anonymous nECrO said...

[quote]Umm, i have been watching extremesystems forum and Conroe is badly beating K8 clock for clock and overall. Solid job for a chip with 4 gen old tech. AMD will prolly file chapter 11 themselves - hard to live when you know that 1994 tech chip is owning your own ones.[/quote]


Vaporware. Benchmarks of engineering samples vs. the competitions last gen chips are worthless. Much like your post.

9:21 PM, May 17, 2006  
Anonymous Anonymous said...

Intel's not going bankrupt. Intel hasn't had an unprofitable quarter for over a decade.

The average user STILL does not need 64-bit computing. Despite the fact that Vista will be 64-bit and all Intel and AMD processors will have 64-bit addressing next year, most users would be quite content to live in 32-bits for the next few years.

Finally Shakira (can't be bothered to spell it correctly), you're an idiot.

12:34 PM, June 09, 2006  
Anonymous Anonymous said...

Just checking INTC and AMD's balance sheets for the most recent quarter - INTC is down to $5B in cash, despite a fresh round of financing yielding $2.5B. That's 6 weeks of cash based on annual revenue.
AMD has 6 months of cash reserve by the same metric.

Worse, had INTC not got the additional funding - they'd be down to 3 weeks of cash with a burn rate of $1B/month.

Sharikou might be on to something.

2:42 PM, June 10, 2006  
Anonymous Anonymous said...

Intel's expected technical advantage with their Core 2 Duo CPUs will be short lived

Even if the Core 2 Duos are as good as claimed, AMD will soon be coming out with their own 65nm CPUs with lower power and higher performance.

By the time Intel gets ramped up with their new stuff and their old inventory of P4s is out of the way, AMD will be churning out superior CPUs.

All Intel did was to take their Pentium-M design, shrink it to 65nm, patched in EM64T and another execution engine, and then targeted ALL the market segments with it: Desktops, Servers and mobile.

What do you think would happen if AMD did the same thing with their new Turion?

Intel has no more dry powder to fight with. AMD is just warming up.

3:26 AM, June 25, 2006  
Anonymous Anonymous said...

necro:
you're calling Core 2 Duo vaporware before its release date? Real clever there buddy, keep up the good work.

2:10 AM, June 26, 2006  
Anonymous Anonymous said...

Another thing most people forget to think about is that the fastest $1000 CPU's make up only around 1% of the market (correct me if I'm wrong), AMD has dropped prices and has the price/performance crown which is the most important for the average consumer. As for the top Conroe vs FX-62, with the fastest DDR2 the Conroe is only around 9% faster in some (not all) games. This will be a temporary lead until AMD goes 65nm.

To summarize: Intel will have a temporary lead in only some benchmarks, by only 9%, in the the 1% market share of the highest end CPU's. All the rest is owned by AMD. AMD will own the performance crown when they go 65nm.

Things are looking great for AMD, and terrible for Intel. Is anyone reading this considering getting an Intel CPU (non-Conroe)? I think not, and neither is anyone else, and Intel has over 7 billion $ worth of them in stock...

1:37 AM, July 26, 2006  
Anonymous Anonymous said...

Unless Intel deliver Conroe with leading performance and good availability by 4Q06, it will be game over. AMD's 65nm parts will be super strong. And AMD will be able to supply 50% of the market.

Yeah, Brisbane is SUPER STRONG. You say these things like you know them, and frankly, you don't.

http://anandtech.com/cpuchipsets/showdoc.aspx?i=2889

Boy look at the MASSIVE improvements, it's like a magical change. Seriously, until K8L comes, AMD hasn't got a snowball's chance in hell of retaking either performance OR power consumption crown.

And neither Intel nor AMD will ever go bankrupt as long as we need computers. I take it you never took a basic microeconomics course. These two companies need each other to exist. Without one, the other goes under thanks to the FTC, so you'd better hope Intel keeps on chuggin', because otherwise AMD will stagnate us and nothing will ever get done.

3:48 AM, December 15, 2006  

Post a Comment

Links to this post:

Create a Link

<< Home