In defense of AMD: JC's perspective
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Does AMD need new management?
Submitted by: John Cholewa (jc@chiptech.com)
Location:Valley Stream, NY
It's silly to say that AMD has been having poor execution or even that
they had a bad 4th quarter. If you take a look, AMD has managed to
successfully increase their clock speed by about 50MHz every three
months over the last year. In comparison, Intel has been stuck at
450MHz (admittedly a higher speed than AMD's offerings, but that's not
my point) for the past six months. IDT has been at 240MHz for an
entire year, and Cyrix, I think, went up by no greater than 62MHz
(from 208MHz to 270MHz) in the last year.
AMD's execution has been only slightly short of phenominal. Their only
problem was what we are dwelling on now, but this problem didn't even
cause them to dip below their MHz ramp.
To compare...why is everyone ignoring the problems Intel has had over
the same period? Remember the 4-way Xeon flaw? Or the Xeon-450 delay?
Or the 2MB Xeon delay (a two quarter delay, I might add)? Perhaps the
shortage they had in lower clock PIIs might jog your memory. Or the
frighteningly bad performance shortcomings of the original
Celeron. Hmmm...wasn't Merced delayed by six months? So was
Willamette, but few people know that -- IA-32 P7 was originally slated
for the end of THIS year, and now is slated for the end of 2000 or
maybe early 2001.
So, what did AMD miss out on? They made as many 400MHz chips as they
promised, they had a slight Q4 dip in 350MHz offerings. A **SLIGHT
DIP**, compared to the numerous Intel no-shows.
As for AMD's fourth quarter, it was fantastic. Not pathetic,
*fantastic*. In the wake of increasing competition at the low end, AMD
increased their revenues by 15% from Q3 (Intel only went up 13%) and
they increased their earnings from one cent per share to fifteen cents
per share. What of the analysts? About a week before AMD's report, the
consensus was *under* what AMD earned for the quarter. In the last
week, several analysts jumped their estimates up to as high as $0.30
per share FOR NO REASON, ON NO NEWS. AMD delivered on their
promises,
for the most part. They shipped out far more chips than initially
estimated, and they succeeded in grabbing a whole load of market
share.
A company that succeeds in grabbing phenominal market share,
substantial profit increases, and amazing capacity jumps, all in the
face of a competitor that has a market cap fifty times higher, has
tons more of R&D spending, and has enough high margin products (a
monopoly in such products, I might mention) to fuel a low-end pricing
strategy that some consider predatory. The very fact they are managing
this screams out to me that the management can stay for the time
being.
-JC |
