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Politics : Formerly About Advanced Micro Devices
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To: Crossy who wrote (40844)11/5/1998 2:29:00 AM
From: nihil  Read Replies (2) of 1573130
 
RE: competing with Intel makes you really tough

and/or really broke. The problem with AMD as an acquisition is that the physical and IPR assets are useless for anything except semiconductor mfg, and the human assets would demand premium compensation to stay on, and no one except Intel has demonstrated ability to reward semiconductor people. IMO AMD has to fight it out independently, although it should welcome minority equity investment from anyone who wants to promote competition in microprocessors.
Its ability to continue to fight has deteriorated sharply. Its long-term debt position has deteriorated steadily over the past five years. Its strategy is announced as taking on Intel in a struggle to the death. Whose death is it most likely to be? Intel is able to make a killing in a month by investing a fraction of its surplus cash in MU, a really enormous amount of paper profit (about $200 million). The increase in Intel's capitalization over the same period is about $36 billion, i.e. the market thinks the increase is Intel is worth about six AMD's. Selling a huge volume at a loss is a mug's game. AMD has to develop really superior products, manufacture them flawlessly, position them for decent markups, and gain a reputation for quality and value. I believe that AMD can continue its present strategy and make small profits, which will not be enough to flourish. It is wasting its limited resources fighting the cheap end of the market, but it may be too late for it to try to fight anywhere else. As it is, it fulfills Intel's dream of a second source -- slow, late and inferior. Few rational people care to compete with Intel in cheap and fast. AMD may not be rational.
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