Brian,
FAB 25 is magnificent. No doubt. I invested in AMD starting a year ago because I thought they finally had the right combination - the best process in the world from IBM, a competent x86 design from NexGen, and historically they've always been strong in manufacturing. I have first hand knowledge of Fab25. So I loaded up. Unfortunately the story has not played out (though I am not all that unhappy with my returns, I could have had better returns if I had exited 6 months ago).
My problem with AMD is management:
1. They plough precious capital into FASL's second fab. I am interested in a pure play in the high margin processor business. I couldn't be less interested in commodity products like FLASH.
2. They say they are going to spin out Vantis, but they do it in name only. They don't have the courage to cut it lose and focus on MPUs.
3. K6 is faster than PMMX, but they position it as a cheap clone. As Maxwell has pointed out, AMD isn't going to gain much market share if all they can do is save the OEM's $25.
4. But by far the biggest sin has been that they failed to execute in manufacturing. By far the biggest profits in a processor are immediately after introduction. AMD's failure to ramp K6 will cost them tens or hundreds of millions of lost dollars. A processor sold now is worth 2-3x what it will command six months from now. Fab25 looks great on paper, but let's face it, AMD blew it (just ask the ChipMerchant, they're sold out).
I could forgive all this except I feel that management has lost control and credibility. They say they are running 150K chips per week, but where are they? Do you honestly believe that AMD produced 150K chips last week? The week before? Does anyone?
I give Intel credit, they pushed and shoved AMD so hard and so fast that if ever there was a "dizzy" company its AMD. They are completely off their story. Hopefully K6+ can get them back on track, but I fear that will be more futures. For AMD, the future is now. This stock has to get its PE in line and start showing a bottom line return.
Just my two cents. I wish AMD all the luck in the work, but I think the AMD fans on this thread need to be a bit more critical and take a more balanced view of AMD and its management. Emotionally I want a serious competitor to Intel. I think it would be good for the industry. I don't see current management being capable of competing with Intel. I'm just hoping for a buyout by a company that can give Intel a run for their money. |
