Kash,
Re:"Milo, I don't know whether AMD is encountering scaling problems with Morgan but I do agree that with low PCs sales why release Palomino. I would like to see AMD take some of their current assets of $1.5 billion and go out and buy another company that allow for greater diversification tof their product lines. I afraid that microprocessors and maybe even flash may not cut it in the future as major growth stimulants for AMD."
Well you sure dont understand this business.
Huh? I understand business very well, and this business is not mystical nor is it so different from other businesses.
AMD introduced a great product in the AThlon. Then they set off to improve it. Make it faster, smaller, cheaper etc. All semi companies do this as they have to keep running to maintain sales/margins.
True. However in a marketplace where sales are down considerably AND a price war has begun between the two competitors in that marketplace, the fact that a chip "runs faster, smaller, cheaper" most likely will make little difference to the bottom line. And while I consider it important, I was choosing to focus on the macro rather than the micro since the micro is so very screwed right now. That's all...its certainly did not warrant such a strong response.
Unfortunately for AMD their incremental version is late, slow and/or yields poorly. And this is BAD NEWS. AMD needs FASTER chips that are CHEAPER to make - right now they have neither with palomino.
From the sounds of your prognosis, there is little that AMD can do about Morgan. But if there is something they can do about it, I, for one, am not stopping them. I was simply suggesting there are other ways to make hay while the sun is NOT shining.
re:"If AMD could find a chip company without a lot of debt and a good product line, it could probably get it for a very good price given the current state of the industry."
Huh??
Such a company would need to have sales in >>$1bn to impact AMDs bottom line.
And if they don't, you don't buy them?
Many times its the small companies with sales revs. <<$bln that are bought by the CSCOs and Intels.
Such a company would need to be growing rapidly (30%++ per annum) in todays down climate.
MRVL is one of several examples.
Such a company would need to be profitable to defray huge potential lossess.
Why?
What a company the size of an AMD brings to the equation is their large volume production and economies of scale. My understanding is you buy these small companies because of their IP, and not their fabs or lack there of. Its the buyer that is expected to make the new IP profitable with its larger scale.
Such a company would be worth north of $10bn++
Not if hasn't turned a profit yet.
Such a company likely doesnt exist and if it did AMD couldnt afford them.
Kash, I think its always good for an AMD to think outside the box...because of the competition Intel presents. I think its particularly apt to think outside the box when economic conditions are not good like they are right now.
But worst than not thinking outside the box is being so negative that one decides nothing can work no matter what.
IMO AMD has to reinvent itself once again. The sleeping giant is awake and its p*ssed and wants to fight. I am afraid coming up with a better chip may not cut the mustard this time...it was good for the last reincarnation 2-3 years back but now its time to move up to the next level. Its especially important in a PC market that may be heavily dependent on replacement sales for its growth.
That's why I think it may be time for AMD to look at new directions....look for new markets. Its probably not the view shared on this thread but its been my experience that when a company keeps coming up with cheaper, smaller, faster over and over, eventually it becomes redundant and ineffectual. And that can be very bad for business.
ted |
