Tuesday, November 07, 2006

DELL to be 50% AMD soon

Two more DELL AMD notebooks appear, including the Latitude AMD Notebook for business.

Mobile is Intel's last stronghold, once AMD breaks the wall here, Intel's BK will be accelerated. AMD+ATI are all Vista premium capable. Intel graphics are all ultra low end, unworthy of 3D.

Added on Nov 7, 2006:

Now, DELL also adds an OptiPlex AMD business PC.

So, DELL's AMD line has become quite robust in a just a couple of months. Two Opteron servers(1U and 4U), two Dimension desktops, one Inspiron notebook, one Latitude notebook, one OptiPlex desktop....

Every AMD OptiPlex and Latitude sold adds 1 to Intel's pile of inventory for sure. AMD wasn't in this market before.

FAB36 and Chartered FAB7 are cranking crazy to get the chips out...

65 Comments:

Anonymous Anonymous said...

http://www.theinquirer.net/default.aspx?article=35562

Dell AMD notebooks priced high

Milking machines

Why pay more for a slower machine?

10:40 AM, November 06, 2006  
Anonymous Anonymous said...

Pretender PhD logic at its best..

Dell: has introduced multiple models of computers with AMD CPUs. The pretender now extrapolats this to 50% MS.

If we take the Pretender's great deducation I can forecast that with this years 2007 car model introduction GM will soon take over all car manufacture with its huge wave of new models. Toyota, Honda pale in comparison.

Sorry models don't matter, volume and profits matter.

11:40 AM, November 06, 2006  
Anonymous Anonymous said...

Please give us a new date besides Q208:)

11:47 AM, November 06, 2006  
Anonymous Anonymous said...

Yay! Then, once Intel are gone, they can get rid of NVidia as well, and we'll have the CPU, Chipset and GPU markets all controlled by the same company! Some might say that such a situation would hurt the market, but come on guys, it's AMD! They can't do ANYTHING wrong!

11:49 AM, November 06, 2006  
Anonymous Anonymous said...

Slippery Slope says:

Right on Doctor! Is your year end run-rate market share percentage still on target? It would be great if AMD can ramp up enough to satisfy their channel partners.

12:34 PM, November 06, 2006  
Blogger Dr. Yield, PhD, MBA said...

Intel's BK will be accelerated

So please tell us -- it will be accelerated to when?

For the record:

1. Original prediction in Q206 was 5-7 quarters, which results in "BK" between Q307 and Q108.

2. That prediction has been revised (slipped out) to Q208. Explanations as to why they have slipped have been widely varying.

3. Within the past 24 hours, you posted in another thread that Intel would "BK" in Q208. Is the content of this post new since that posting, and is that why you are now changing your prediction again?

So, for everyone's benefit, please tell us- when is BK coming?

On a lighter note, why is Intel going to Burger King anyway? And are they getting a Whopper or a BK Broiler?

12:41 PM, November 06, 2006  
Anonymous PENIX said...

It should be noted that it is well known that AMD profit margins are higher than Intel profit margins. When AMD hits 50% market share, they will be more profitable than Intel.

1:27 PM, November 06, 2006  
Anonymous Anonymous said...

50%??? Oh prey tell where you come up with this number. Why not just say they are going 100% by 2008, since Intel is going bankrupt right??? You're no fun anymore. At least give a half effort to put some kind of data backing up your ridiculous posts.

1:43 PM, November 06, 2006  
Anonymous Anonymous said...

Regarding BK, if we exit 2007 with AMD on 40% of the market will Intel still be making a profit?

If they are infact making a loss, having to writeoff a couple of fabs with staff and inventory, and presuming they have hived off all their assets to boost profits through 2007 while their market share falls... where does that leave them?

I don't believe they will necessarily bankrupt but they could start to take on debt. What does GM have right now, about $100bn debt? GM basically exists to service its debt. It would only take the smallest crisis to prevent renewing the credit and forcing chapter 11. Given Intel is staring at 2 years of negative growth, they need to start changing direction now.

My assumption that they will do so is the second reason not to believe they will Burger King by Q2 08. But I fully expect an impending cash flow problem to force a greater strategic rethink then they have played to date.

...

3:28 PM, November 06, 2006  
Blogger enumae said...

Penix said...

"When AMD hits 50% market share, they will be more profitable than Intel."

When do you see this happening?

Or are you only applying this to Dell?

Thanks.

4:23 PM, November 06, 2006  
Anonymous roborat said...

I don't understand the logic why shiping more discounted parts to Dell is a good thing when clearly the channel is already losing money waiting for parts from AMD?

...bearing in mind ofcourse that AMD is not increasing volume while it transitions to 65nm.

4:37 PM, November 06, 2006  
Blogger DBA said...

Hey Dr,

It seems you got quite a few anit-social Intel fans. :-)

You are better off be in UK

4:39 PM, November 06, 2006  
Anonymous Anonymous said...

This blog has been really boring recently. Sharikou we need an update on the chip exploding thing, or some numbers for Q4. Is Amd going 50% by the end of Q4? K8L will frag conroe by 300%. You have to give us something good, these last several post have been lame. I mean who really cares about Dell, ugh! Give us something to talk about. How about...Intel will go bankrupt by the end of this year. Now I'm sure you can come up with something like "run by share" or whatever you call it to justify you r claim.

5:12 PM, November 06, 2006  
Anonymous Anonymous said...

None of Ati or AMD are worth anything anymore. Their processors are old and slow. Ati's graphics cards are slow. Nothing can touch Core 2 Duo + Geforce 7950 GX2. When Geforce 8800 ships this week expect Ati's high end sales to crash. AMD BK by Q4'08.

If AMD was the leading CPU supplier we'd have to pay a fortune for our processors! I think we remember pre Core 2 AMD made us pay over $300 US for a pathetic 3800+ X2. Now for that same price you can get the E6600 which crushes AMD's FX-62 whilst being nowhere near as expensive.

5:42 PM, November 06, 2006  
Anonymous Anonymous said...

Ya, when Intel had little competion from a AMD in the K5-K6 days they were nice and didn't charge a forture for their processors. Don't kid yourself companies are there to make money.

Still, the X2-3800 was cheaper than the equivalently performing netburst processor and consumed a lot less power too. In most thing except some encoding apps the X2-3800 is like a 3.73 Ghz 965XE, and nobody (except sharikou) made such a big deal about that. But now that the tables are turned all the fanboys are making it sound like intel is this wonderful company that has always produced fast processors at good prices and that AMD only has slow outdated hardware that it sells at overpriced prices.

Everyone bought the X2-3800 because it was a steal compared to the equivalent performing pentium processor, while saving power and being highly overclockable without excessive cooling. Now intel has introduced a new "X2-3800" the E6600 (beating all the competitor's chips) and all of a sudden intel is viewed as this amazing company that cares so much.

7:42 PM, November 06, 2006  
Anonymous Anonymous said...

I love the Intel fan mentality. Intel fanboy says AMD is not a leader because they’re inexpensive and then the very next breath this child tells us

“Now for that same price you can get the E6600 which crushes AMD's FX-62 whilst being nowhere near as expensive” you can’t have it both ways idiot

7:50 PM, November 06, 2006  
Anonymous Anonymous said...

Riddle me this...riddle me that...why would a company who can sell every part they make be selling them for less? I'm no genius, but something doesn't add up when AMD is still dropping prices not only on X2s but also on Opterons when they supposedly have a buyer for ever one of those parts. All is not well in the land of Jerry Saunders.

8:30 PM, November 06, 2006  
Anonymous Anonymous said...

I agree with the all the last few posters who say that Intel frags everything that Amd currently has.

8:34 PM, November 06, 2006  
Blogger Joshua said...

come over to rubyworks forums and help this communtity grow @ www.rubyworks.net/forumz

9:15 PM, November 06, 2006  
Anonymous Anonymous said...

It should be noted that it is well known that AMD profit margins are higher than Intel profit margins. When AMD hits 50% market share, they will be more profitable than Intel.

Oh please. You're joking right? AMD's profit margins with their ancient manufacturing process and huge discounts to get Dell on board are higher than Intel's?

Are you completely deranged, or just slightly retarded?

9:26 PM, November 06, 2006  
Anonymous Anonymous said...

WTF are you talking about????

"Anonymous said...

I love the Intel fan mentality. Intel fanboy says AMD is not a leader because they’re inexpensive and then the very next breath this child tells us

“Now for that same price you can get the E6600 which crushes AMD's FX-62 whilst being nowhere near as expensive” you can’t have it both ways idiot

7:50 PM, November 06, 2006"

9:49 PM, November 06, 2006  
Anonymous Anonymous said...

LOL!!!! you sure have a bunch of smart ones following your lead there sharikou. This guy must be a PH.D like you..LOL!


Anonymous said...

I love the Intel fan mentality. Intel fanboy says AMD is not a leader because they’re inexpensive and then the very next breath this child tells us

“Now for that same price you can get the E6600 which crushes AMD's FX-62 whilst being nowhere near as expensive” you can’t have it both ways idiot

7:50 PM, November 06, 2006

9:53 PM, November 06, 2006  
Blogger Mikolaj said...

"DELL to be 50% AMD soon"
AMD just sold 500,000K CPUs notebooks to DELL. This is why they are more expensive than Intel because many people don't know what is benchmark but recognize sometimes AMD brand.
And will but it.
Dell wants to earn money, not loose with AMD, that's why they are waiting for this enormous capacity coming to us in 2007.

Comparing 200mm/90nm 20k wspm with 20k 300/65nm it is easy to imagine that ASP and margins will go up for AMD.

Earning only 10$ on each CPU in 2007 AMD is going to earn 550mln in a year. Now when we talk about 50$ ASP with 50% margin - it gives 25*55m=1,375mln in a year!
This is what I hope AMD is going to bring investors in 2007 and 2008.
This money will help to double 65nm capacity and prepare another battle with 45nm. In 2009 we should have 50/50 situation in terms of capacity. And probably 50/50 in DELL portfolio...

10:51 PM, November 06, 2006  
Anonymous Anonymous said...

Sharikou and the case of the phony PhD...

You are so pathetic! A former Intel employee who was fired, and now goes around trying to talk trash about them. Sad. Get over it, and get to McDonald's where you can start flipping burgers like the monkey you are.

BTW, how did you arrive at these conclusions? This is 100% fabricated!

11:06 PM, November 06, 2006  
Anonymous Anonymous said...

BTW, only morons read the inquirer. It is not a real publication.

11:07 PM, November 06, 2006  
Anonymous Anonymous said...

Intel must change itself and become a civilized and ethical member of the IT industry. Right now, many of the things Intel has done are bordered on fraud. Intel has bad genes, its behaviour can be traced back to NAZI and Soviet oppression. It's an animal living in constant fear and anxiety, and it's willing to step over moral boundaries for its survival. In essence, Intel is anti-American and anti-progress.

Intel must change its moral code to earn any respect.

Right now, it's safe to say that Intel will lag behind AMD in the next 5 years. The technology gap is simply too big.
10:05 AM, May 22, 2006

12:32 AM, November 07, 2006  
Anonymous Anonymous said...

Why AMD notebooks?
Probably because businessmen who fly alot cant take a intel notebook on board a lot of planes due to fire concerns.
Conroe on a 945 chipset intel motherboard with intel conroe graphics cannot run google earth, hardly state of the art.
Conroe was state of the art when pentium 3s had there hey day, now just fast antiques.
5 billion dollar dead inventory and intel cant sell the conroes cause nobody wants a super charged pentium 3.
Another great conroe failure, my e6600 takes 2.75 sec longer to shut down the operating system than my AM2-5000+. Another benchmark loss for conroe.
If you fanboys really want to see how a conroe works put one on a via chipset motherboard and load linux then do a top command and see where all of the cpu power goes when running multiple applications, I think you will be quite surprised too see which tasks receive all or most of the cpu power.

12:35 AM, November 07, 2006  
Anonymous Anonymous said...

Oh come on now, exploding chips. Not even a junior tech at MIT would be able to justify that claim.

12:42 AM, November 07, 2006  
Anonymous Anonymous said...

When AMD signed their name on the Dell agreement they signed their name on their death. Amd will be dead by the end of the decade. They will be helped by the U.S. and ironically by Intel. Intel has bigger fish to fry like those that are coming from the east..Korea, Japan, China, that is what Intel should worry about.

12:55 AM, November 07, 2006  
Anonymous Anonymous said...

@ mikolai

What are benchmarks ? Even if they are hammered hard into brain ?!

If there are NO Conroes in sufficient numbers. If you have 25 M Conroes at end of year (or 5 M NOW), you cant build up 5 M + 1 computers now.

Intel is said to be able to ship 50 % of capacity (~100 M per year) conroes in third quarter of 2007.

This is physically the truth.

Till then the people have to go celeron or AMD! Simply!

"Where do you want to go today", someone would say.

regards

1:37 AM, November 07, 2006  
Anonymous Anonymous said...

They dont have to be exploding chips, all they have to do is draw too much power from that weak battery power pack from sony.
I noticed none of you fanboys like to comment on the fact the intel platforms with onboard graphics cant run google earth regardless of the size and speed conroe you put on it.
Stable and reliable AMD ATI platforms can run google earth and are low in cost and plentiful.
AMDs stable platforms is one of the best values in the computer world and thats why AMD sales are through the roof.
AMDs low prices and good value is a sales holiday.
Intel relies totally on the motherboard to make up for conroes lack of modern design thats why conroe sales are null.
No matter how fast you push a model T, at the end of the day its still just an antique.
Intel would do well to fix its many platform problems or it will continue to drown in huge inventories of 5 billion and growing.
Conroe and intel chipset motherboards are just way too expensive for the tiny speed bump they represent.

8:34 AM, November 07, 2006  
Anonymous Anonymous said...

"roborat said...
I don't understand the logic why shiping more discounted parts to Dell is a good thing when clearly the channel is already losing money waiting for parts from AMD?"

Why would you say that AMD is shipping more discounted parts to dell. I would assume you have facts to back up your assertion. Or are you going to say it's common sense? How can dell be good for intel, but not for AMD.

If anything, intel needs to ship more discounted parts to Dell to clear their overstock.

8:37 AM, November 07, 2006  
Anonymous Anonymous said...

Dell still sells Intel, as a matter of fact they probably sell 95% Intel, and of that 90% is still P4 parts. Amd is getting hammered with the Dell deal because their X2 chips could be selling for more, but Hector wanted Dell so dude your getting screwed on margins.

9:39 AM, November 07, 2006  
Anonymous Anonymous said...

I don't know why you AMD fanatics can't just say that for the first time in a long time, Intel has beaten AMD with the Conroe.

Gauging stupid things like shutdown time is akin to saying that it takes 2 seconds longer for an occupant of a Ferrari to get out of the car.

Or gauging something like floating point calculations is similar to saying a Ferrari can do the 1/4 mile 5% faster than a Mercedes. What about the time you're driving around the countryside?

The point is, does it run YOUR apps faster?

About Dell going 50% AMD. That may be true, as people buy the Dell brand for the Dell name, not for the CPU brand. They buy a Dell because it's cheaper than the same PC somewhere else. You're kidding yourself if you think it's for any other reason in most cases.

If Dell puts AMD in their machines for a lower price, people will buy them. It's not about performance.

So Joe Schmoe or company X buys a desktop PC for $100 less, that's meaningful. All they want is a modern PC to be back in the game. Do they care about Super Pi? SHOULD they care about Super Pi? No.

For this reason I agree that AMD will pull off 50% of Dell's desktop sales. I don't agree with the idea that AMD will increase percentage in laptop sales, they just got too much negative stigma (deservedly) in this arena over the last few years and not many people will touch them until they prove themselves again.

9:54 AM, November 07, 2006  
Anonymous Anonymous said...

Shari,

At least change your writing style and vocabulary if your going to write and support your own positions using the anonymous option.

12:17 PM, November 07, 2006  
Anonymous PENIX said...

When Dell is 50% AMD, the AMD sales will be outpacing the Intel sales. We all know that AMD chips are superior to Intel chips, but the average consumer does not. What they do see is a price tag. When two comparable systems are put up against each other, the lower price wins. This is why AMD systems will be flying out the door and Intel systems will be collecting dust.

AMD chips are faster, cooler, more reliable, and cost less. This is undeniable, but only the cost matters. Fortunately for the simple minded consumer, the lower cost alternative is superior in every fashion.

If Intel wants to stay in the game, they need to slash their prices even more. Intel is quickly losing more and more ground with DELL. Intel cannot afford to lose this territory. Either they drop costs significantly to increase their market share with DELL, or they should start filing for bankruptcy now.

1:18 PM, November 07, 2006  
Anonymous Anonymous said...

OH LORD, WHEN CAN WE SEE DELL PRECISION WORKSTATION BASE ON AMD OPTERON. I WOULD LIKE TO HAVE SOMETHING 2210 X 2 WITH 4GB RUNNING VISTA AND QUAD SLI GRAPHIC. :{

HINGSUN

1:35 PM, November 07, 2006  
Anonymous PENIX said...

enumae said...

Penix said...

"When AMD hits 50% market share, they will be more profitable than Intel."

When do you see this happening?

Or are you only applying this to Dell?

Thanks.


In this particular case I am referring to the entire market, not Dell exclusively.

I currently do not have an accurate projection on when AMD will cross the 50% mark. AMD has been consistanly growing at a faster rate than my estimations. AMD now has Dell and the multination exclusive on the XO.

2:49 PM, November 07, 2006  
Anonymous Anonymous said...

"It should be noted that it is well known that AMD profit margins are higher than Intel profit margins."

It is also well known that Intel sells lower margin non CPU products (chipsets, boards, flash, wireless...) that affect gross margin. And it should also be noted there is a difference between GROSS MARGIN and PROFIT MARGIN!

Don't have much of a finance background do you?

2:55 PM, November 07, 2006  
Anonymous Anonymous said...

"The point is, does it run YOUR apps faster?"

No, the point is does it run YOUR apps at all.

3:15 PM, November 07, 2006  
Anonymous Anonymous said...

AMD's FAB36 has been in production since Oct 14, 2005, finished chips should hit the market soon. No doubt, there will be an oversupply of CPUs in the market, even Joe Osha is worried about the excess capacity. What will customers buy? I think price/performance will be a deciding factor. AMD is used to selling Sempron 64s at $50 or less. No matter how you look at it, INTEL will lose market share and units.

However, what really matters to a company is not units or market share, it's revenue and profits. If INTEL can sell 100 chips for 10 billion, it will be super rich.

So, facing the inevitable decline of units and market share, the only way INTEL can maintain revenue and profit growth is to hike CPU prices.

AMD's capacity is limited and can only supply 25% of the market next year, INTEL has the say on the rest 75%. Furthermore, corporations tend to prefer INTEL brand. INTEL shouldn't have much problem increase the ASPs by 20%, to negate the effect of unit decrease (ASP increase can be done by simply lowering production of low end models).

But there is a problem: INTEL has made it a top priority to keep DELL happy. When the DELL dude makes noise about AMD, INTEL folks cave in and give more discounts, or in other words, selling at lower ASPs. And to prevent others such as HP and Lenovo from being too disgruntled, INTEL must give them some albeit less discounts also.

So, INTEL is facing a dilemma here. On one hand, market share drop is an ineveitability and it needs to hike ASP to maintain revenue growth. On the other hand, feeding DELL is a futile effort to retain market share and will result in lower ASP. (With DELL being the favourite darling, others get pushed over to AMD).

The two are in direct conflict.

Clearly, keep feeding DELL with lower priced products coupled with losing overall market share will lead to revenue and profit short fall.

It seems that the only way out is for INTEL to drop the most favoured treatment for DELL and increase prices cross the board, and make prices the same for everyone, making it possible for every one (instead of just DELL) to profit in the INTEL space and create a more balanced INTEL market.

3:39 PM, November 07, 2006  
Blogger TheKhalif said...

OH LORD, WHEN CAN WE SEE DELL PRECISION WORKSTATION BASE ON AMD OPTERON. I WOULD LIKE TO HAVE SOMETHING 2210 X 2 WITH 4GB RUNNING VISTA AND QUAD SLI GRAPHIC. :{

Don't be surprised if 4x4 becomes the AMD wksta for Dell. ALienware is releasing maybe the first 4x4 system.

5:34 PM, November 07, 2006  
Blogger Jeach! said...

Some of you Intel people have a serious problem at analysing a situation!

1. AMD's Processor Price

So what if they are priced a little higher than Intel? Havn't you heard that AMD sells every damn chip they make (unlike Intel). When sales are good, you keep prices slighly higher than your competitor. That's finance 101!

2. AMD going DELL

Reduced margins? Yah right, read my third point! I work in the IT sector and I can afirm you that most (PC/Workstation/Server) administrators are incompetant to the point of ordering DELL simply because it is easy and convenient. When there is a problem, you don't have to think. You simply pick up the WHOLE computer and ship it back to DELL while they send you a brand new one! Man that's easy! Do most admins even know the difference between AMD or Intel? NO! Will they keep buying DELL and receive AMD processors? YES!

Bottom line is this is a big step into the corporate doorway for AMD. You should see large volume here for them.

3. AMD Margins

Although alot of investors will put a lot of importance to this indicator, I say this:

a) Long term all that matters is how much revenue growth you have and how much profit you've made.

b) What is better? AMD selling 1 million units at 60% margins without DELL. Or AMD selling 3 million units at 50% with DELL? You do the math... oh wait you can't so let me do it for you:

1 million x 60% = 600,000
3 million x 50% = 1,500,000

Look how low your margins can go just to attain the same profitability as your 60%:

3 million x 40% = 1,200,000
3 million x 30% = 900,000
3 million x 20% = 600,000

Jeach!

5:42 PM, November 07, 2006  
Blogger Jeach! said...

I was at Office Depot this past weekend and I decided to take count of computer inventory.

I had done this about a year and a half ago and at that time it was about 85% dominated by Intel processors.

Here is the new survey:

There were 8 PC models of which AMD had 5 and Intel had 3. Of those 5 AMD, they consisted of the new cases with a million connectors, lots of memory dual core, DVD Rom, etc.

Two of the Intel PC's were modern cases with the works but an old Pentium processor, half the RAM, half the hard drive space and I'm not grphics expert but it didn't seem impressive. All for $200 cheaper. Didn't seem like a great deal. The third PC was about $300 cheaper but was that plain old white metal case. I doubt this thing will ever get sold.

As for laptops, it was about 50/50! But what surprised me the most is that half the Intel models had the Intel video card. Wow, you can play 3D TETRIS!

Most AMD laptops had a little more RAM, ATI video card, lots of RAM, etc. for a little cheaper than most Intel laptops.

You make your own conclusions...

Jeach!

5:51 PM, November 07, 2006  
Anonymous Anonymous said...

The PhD pretender said
"FAB36 and Chartered FAB7 workers are working like slaves to get the chips out"

I am surprised he used such a term. Things must not be going well in Dresden and Sinagpore. COuld it be the Nazi and the Chinks are good at pumping chip?

Where is them 65nm AMD chips? Where oh where. INTEL has shipped 40 million and AMD nothing!

6:12 PM, November 07, 2006  
Blogger N4CR said...

The point is, does it run YOUR apps faster?

It didn't shut down faster though...

'At least conroe can crash faster' (as my father puts it when it comes to computer upgrade time...)

7:06 PM, November 07, 2006  
Anonymous Anonymous said...

Phd Math?

1 million x 60% = 600,000
3 million x 50% = 1,500,000

Look how low your margins can go just to attain the same profitability as your 60%:

3 million x 40% = 1,200,000
3 million x 30% = 900,000
3 million x 20% = 600,000

Jeach!

Lets see now if that average margin is what 30 buck a chip... AMD makes a whopping 30 million? Did I get that right 30 Million. If they actually make 100 bucks per chip which they aren't.. they that is a eye popping 300 million profit.

I'm impressed. Looks like AMD is going to give INTEL a run. INTEL is surely going BK. Maybe while they are at Burger King they should supersize it. As you'll be flipping them burger with your financial wizardy

9:00 PM, November 07, 2006  
Anonymous Anonymous said...

All hail BK. The king is back, and now for a limited time you can supersize you fries for free.

10:40 PM, November 07, 2006  
Anonymous Anonymous said...

Why doesn't Intel, who by the way is worth over 100 billion dollars, just buy out Amd? Intel can easily eat up that company and prepare for the real competition, which will come from the east. Companies like Samsung, Toshiba, NEC, etc. Those are the companies that will give Intel a run for the top spot. Intel just needs to stop fiddling around with Amd and get ready for a real war which will happen by the end of the decade.

11:04 PM, November 07, 2006  
Anonymous Anonymous said...

AMD at this point is becoming quite attractive as a take over target. AMD is in the right market, has lots of intellectual property, has a great product and customer profile. However, AMD is cash and capacity strapped to meet its current demand and for future R&D. I see a Private Equity Firm or a much larger company buying AMD soon. Just my 2 cents.....

10:12 AM, November 08, 2006  
Blogger Sharikou, Ph. D said...

I see a Private Equity Firm or a much larger company buying AMD soon. Just my 2 cents

Few can afford to buy AMD, you need at least $40 billion.

AMD 65nm will be out soon, capacity will always be a problem, as AMD can't meet 100% of the market demand yet. It will be able to by 2009. By then, Intel already BKed.

10:49 AM, November 08, 2006  
Anonymous Anonymous said...

The current number of issued shares of AMD from your previous post total a little over 1 billion. With the current market value of 21.20 @ 2pm EST NYSE, the total value of AMD would be closer to 22.5 billion not 40 billion. Remember, Freescale sold for 17 billion a few weeks ago to a Private Equity Firm. And BTW they are on the prowl for fresh silicon. Thanks!

11:22 AM, November 08, 2006  
Anonymous enumae said...

Sharikou said...

"...as AMD can't meet 100% of the market demand yet. It will be able to by 2009..."

How can you even say these things and be serious?

Using a 100mm2 die for 45nm dual core, and 657 dies per 300mm wafer with 45,000 wspm you get 354,780,000 at perfect yields, multiply that by about 0.70 (70% yields) giving you about 248,346,000 45nm processors.

The problem arises when you factor in 10% market growth per year (could be more could be less)...

2006 - 230 million processors
2007 - 250 million processors
2008 - 275 million processors
2009 - 302 million processors

So the 248 million is 82% not 100%.

Then factor in what AMD said in its own analyst day slides...

Fully positioned to service 1/3 of the market by 2008

So your saying they will be able to serve the other 66% in a years time?

Well you can't say it because of 32nm because thats not until 2010.

11:43 AM, November 08, 2006  
Blogger Dr. Yield, PhD, MBA said...

Once again our humble host demonstrates his mastery of the field of finance:

Few can afford to buy AMD, you need at least $40 billion.

From which orifice did you derive this number? Was it derived, or merely extracted? Can you provide a basis for this number?

Let's use a PE takeover of a profitable semiconductor biz as an example, shall we?

Freescale agreed to be acquired by a consortium of PE investors. Very profitable company, generating >$2/share in earnings for a P/E ratio of about 14 at the time they agreed to be acquired. Terms of the deal was as well, for that matter. Regardless, let's assume that AMD can swing the same (substantial) 42% premium over their current market cap for a buyout price. Their current market cap is 10.4B, which would yield a purchase price of... 14.8B.

Even if AMD could command a 100% premium for a takeover, they would still only be worth $20B!!!

Once again, we can logically conclude that you are talking out of an orifice somewhere south of your neck. With proof. (Unless you can find evidence of a similar case of a company of substantial size garnering a 400% price premium).

11:48 AM, November 08, 2006  
Anonymous Anonymous said...

In the world of giant corporations, Amd is but a pawn to their game. I fear that if an American company like IBM or Intel doesn't buy them out then the guys from Asia will. Not sure what this would mean to a consumer but I do know what will happen to all the American jobs.

12:33 PM, November 08, 2006  
Blogger Sharikou, Ph. D said...

Even if AMD could command a 100% premium for a takeover, they would still only be worth $20B!!!


Stupid. Even a crap company like Intel has a mkt cap of 100 billion. By the time you come up with $20billion, AMD has taken 50% of the market and is making $5 a share.

AMD's market cap was $20b just a few months ago.

1:40 PM, November 08, 2006  
Blogger Jeach! said...

Current AMD market capitalization is at $11.53 Billion.

Don't forgetting to add in the ATI aquisition which was financed with $1 billion in shares. The rest of the aquisition price factors out when subtracting assets minus debt.

So that gives AMD a market cap of $12.5 billion.

Add in a 40% premium to that equation and you end up at $17.5 billion.

Why 40% rather than the standard 30%? Because AMD has alot of intelectual prorperty (IP), also known as intangibles on the ballance sheet, which isn't usually worth much initially. But all of this IP is in transition of being realized.

Remember AMD is (on average) ranked the 3rd company in the world for the number of patents awarded to in the last decade. I think IBM is a company which beat them, but Intel sure as hell isn't number 2.

Anyway, from here till that time where a company could possibly make an offer I believe it could easily be worth $20 billion.

At that price, in a risky industry, only an-all-stock purchase could be made. From a company which would be diluted by a maximum of about 20% (1/5th). Do a search for a $100 billion company in this industry and you come to realize that not too many companies remain.

Jeach!

6:23 PM, November 08, 2006  
Anonymous Anonymous said...

Lets recap, shall we? AMD has no 65nm processors, while Intel has shipped in excess of 40 million! Intel has both Quad Core desktop CPUs and Server CPUs... AMD has.... a motherboard that supports 2 processors for a total of 4 cores. Real innovative stuff there. The Athlon 64 X2 is more than 20% slower than Intel's Core 2 Duo processors.

AMD's mobile processors run hotter and slower than Intels. Wowee! AMD must feel really bad now.

Intel has faster server, desktop and mobile processors! There Ati division isn't doing too well either. One of Nvidia's new 8800 GTX cards are faster than TWO of the X1950 cards in crossfire!

I think it's safe to say that AMD is doomed. The only bad thing is that now they're taking ATI down with them. Oh well. Everyone knows that Intel makes the best processors, and that Nvidia makes the best GPUs!

7:52 PM, November 08, 2006  
Blogger Dr. Yield, PhD, MBA said...

Don't forgetting to add in the ATI aquisition which was financed with $1 billion in shares.

Jeach, the market cap value on Google includes the shares issued. The deal already closed, so the shares are already out there. 11.35M it is (note that is ~1B more than the dated figure on Yahoo that I referred to).

This means that a 40% premium is a purchase prices of 16.2B- Less than Freescale went for.

At that price, in a risky industry, only an-all-stock purchase could be made.

Um, Jeach, hate to break it to you, but private equity firms take the companies private by cash+debt leveraged buyouts. Of course, AMD is fairly leveraged already, so more cash would be needed for this deal, or higher interest rate debt would be required- but $17B is not a stretch for PE firms.

11:30 PM, November 08, 2006  
Blogger Dr. Yield, PhD, MBA said...

Our humble host mumbled to himself: Stupid. Even a crap company like Intel has a mkt cap of 100 billion. By the time you come up with $20billion, AMD has taken 50% of the market and is making $5 a share.

PE firms can come up with $20B in under a month if they see a deal they want. Probably less.

AMD's market cap was $20b just a few months ago.

And today it is $11B. The market has spoken- that is what AMD is worth. And if a consortium of investors (aka PE firms) offered shareholders 40% more than their stock is worth next month, I guarantee you that the majority votes for the deal. $15B now, or $20+B eventually? Sorry, but admit you are wrong here and move on. No way and hell is AMD worth close to $40B today- that is your original figure, no? Hopefully... eventually... but not now.

11:35 PM, November 08, 2006  
Anonymous Anonymous said...

When calculating AMD fab capacities you all seem to have missed that they need to make some GPU's, chipsets and other things somewhere too. Or will all those things be sent to be done by someone else as they were when AMD didn't own ATI?

6:45 AM, November 09, 2006  
Anonymous edward said...

"Or will all those things be sent to be done by someone else as they were when AMD didn't own ATI?"

The short answer is "yes".

12:52 PM, November 09, 2006  
Anonymous Anonymous said...

"The short answer is "yes"."

So much for the proposed giant leap in ATI graphics manufacturing. People suggested it will move to the same processing technology as AMD is using. Now it seems it was just a wet dream. Too bad, I would have liked it.

11:54 PM, November 09, 2006  
Anonymous Anonymous said...

One small step at a time.

It took HP and Compaq about 2 years to even share an SAP system (which according to Inq transited so badly they had to fire Peter Blackmore!!) :)

The press release for fusion CPU/GPU was 2008 timeframe if I recall correctly.

In the shorter timeframe, I would expect to see better bundling/integration of notebook CPU/chipsets with better battery life.

9:20 AM, November 10, 2006  
Anonymous Edward said...

"People suggested it will move to the same processing technology as AMD is using. Now it seems it was just a wet dream."

What makes AMD's processing technology so attractive, that ATi needs to use it? Does nVidia use it to make better video chips? Or does Intel use it to make poorer ones?

Or are you suggesting that nVidia uses a process that's superior to AMD's, whereas Intel's is inferior?

IIRC, ATi previously used TSMC 90nm processing; for the planned future, they will continue to do that. TSMC process is very fine at 90nm; it's advancing to 65nm by the end of this year. Also, AMD uses SOI, but TSMC doesn't. I see no reason for ATi to switch production to AMD in short term.

In the long term, though, anything is possible.

"Too bad, I would have liked it."

Apparently you like things for very non-technical reasons. :p

I myself have always preferred nVidia over ATi. The latter sometimes has "sexier" products, but IMO nVidia graphic cards have a more "balanced" performance. Also, its driver support is much better, both for Windows and Linux.

10:51 PM, November 10, 2006  

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