To thread: This is kinda thoughtful, if not earth shaking. From Jack Bryar's column on the "Andover News Network." You might note that "Athlon" is a real typing/spelling challenge,even if it is the last part of PENTathlon!
"All or Nothing at AMD
Near-Monopolist Microsoft was in court last week. It has been in court forever. The reason? It killed off most of it's software rivals. Near-Monopolist Intel is not in court this week. But its domestic competitors are just as dead, even if most of them committed corporate suicide.
In fact only one firm stands between Intel and its absolute dominance of the small computer business. So I have a suggestion to all my new friends in the Open Systems movement. If you've got a few extra dollars to spend this week, you might give a thought to heading down to your local computer store and picking up a computer, ANY computer -- with a processor made by Advanced Micro Devices. With your help, perhaps we can keep Chairman W.J. "Jerry" Sanders III from driving his company into the ground.
I'm quite serious. If you can find a computer with AMD inside, you won't be sorry. AMD doesn't mean cheap and slow anymore. For example, the company puts out a perfectly decent 400 MHz chipset for portable PCs. In fact, the performance of many of its higher speed chips, particularly when dealing with business applications, are every bit as good as the Intel equivalent, if not better. If you're looking at higher-priced screamers, AMD's Athlon processors are out . Soon you should see machines with Althon chipsets running at speeds up to 600 Mhz. Right now AMD has taken the speed lead from Intel for the next 3 months, despite questions (based in history) doubting the accuracy of some AMD claims, particularly the degree to which AMD's design exhibits any of the claimed superiority over Intel's design.
Nevertheless Intel's having some problems of its own. The company recently announced yet another delay of the firm's announced Coppermine chip design, which will be critical to the development of even higher speed chips over the next year or two. And if Intel cannot get their new products developed there may yet be a chance for AMD to take the technical lead for the first time.
But AMD's biggest problem may be that you won't be able to find any of the devices it developed. Many analysts have had serious doubts about the firm's physical capacity to produce its new chips in anything like the quantities needed to make a profitable business, let alone the numbers that could cause it to seriously threaten Intel. This has been an ongoing problem. Last year AMD began to exchange its reputation for "slow but cheap" for a new and highly unfortunate reputation -- "fast, broken and unavailable." QC problems soared. The company's designs were great -- they just couldn't be manufactured efficiently. And the company's physical plant was woefully inadequate to the task of making these chips in the quantities promised by their sales and marketing staff. Worries about the company's physical capacity caused a number of investment professionals to (correctly) doubt the company's prospects as much as a year ago.
The failure to deliver infuriated key customers. The company estimates that their failure to ship in the quantities it promised means that some of those customers will be lost to AMD more or less permanently. Business computer vendors, always skeptical of AMD and afraid of Intel's brand presence, were among the most serious casualties. As a result the firm may have blown-off a chance to capture important niches such as the higher-end mobile market. In fact, the money AMD invested to become a technical leader may never be recovered in the marketplace. Prices are down, shipments are down, and the company lost 200 million last quarter, with no turnaround in sight. Jerry Sander has responded with layoffs, by selling off bits of the company and most unnervingly, by peddling the company's "surplus manufacturing equipment" over the Internet.
In the meantime, AMD's traditional lower-end business has come under attack. Cyrix dumped its chips as it bailed out of the processor market. And Intel's lower-end Celeron products did the job that company intended. AMD occasionally outsold Intel in the low-end market, but Intel's aggressive marketing and willingness to risk losing money on cheap chips took away a profit center that AMD was counting on as it spent its relatively puny resources on leading edge chips.
What makes this all worse is the likelihood that AMD's technical lead is only temporary. Chip speeds continue to accelerate. Prior to announced delays in the Coppermine design, Intel was expected to be shipping higher-end processors early next year, with speeds expected to hit 800 MHz.. If Intel's future Merced and McKinley chips meet the hype, we could see speeds approaching a gigaherz within 12-18 months. AMD vows to compete, but you have to wonder where the money is going to come from.
It's not going to come from AMDs other semiconductor business lines. The semiconductor business as a whole seems poised to go into one of its periodic swoons. Sales are still up, but only a relatively anemic 3% - a rate that in no way justifies the current industry rate of investment, where costs are skyrocketing.
Investors have abandoned the stock in droves. Those that remain are looking for answers-- or at least for someone to blame. At the company's annual meeting last April most stockholders seemed to think the management, and more specifically Jerry Sanders, had made a lot of egregious management errors, and needed to pay for them.
Sanders makes a good target. He's widely regarded as more of a saleman than a manager, and was already nicknamed "the artful dodger" for the number of times he's helped lead AMD to near bankruptcy, only to turn the company around at the last moment. It's been that way at AMD almost from the beginning. Sanders has often said this was part of the penalty for being the second team to leave Fairchild Semiconductor. He left in '69 and struggled to find capital. The first team, led by Robert Noyce, the inventor of the integrated circuit, and the legendary Gordon Moore, had left a year earlier, founding Intel with a flood of investor money. But money aside, Intel hasn't made all the mistakes of basic management committed at AMD. And only at AMD would a president pay himself an average of close to 10 million dollars a year, even while the company was going down the tubes. Intel's managers stocked their board of directors with some of the brightest minds in hi-tech and business. By comparison the most recent "celebrity board member" to join AMD is none other than Robert Palmer, last seen running Digital Equipment into the ground.
There are management changes in the works. S. Atiq Raza has been elected President and Chief Operating Officer. Other changes are coming. One wonders if Jerry Sanders will survive those changes, or if AMD will survive at all. If you're going to go buy an AMD PC, you might want to hurry." |
