Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Elmer Phud who wrote (262067)	10/20/2009 8:56:24 PM
From: smooth2o	Read Replies (1) \| Respond to of 275872

Who said they are? I think they are filling every gap they can find, and then some. One gap they are not filling is the one that's not profitable. Smooth

To: Elmer Phud who wrote (262067)	10/21/2009 12:58:12 PM
From: jackthetab	Read Replies (1) \| Respond to of 275872

While I agree Intel, if they wanted to, could probably compete top to bottom. However, is this necessarily good business? The bottom, presumably is anchored by atom and the top anchored by Nehelem, so the question is how to define the middle. Honestly, they dominate until you hit the niche areas like the mainstream low end, low power applications, and 4+ socket servers which AMD fits in well. So by not positioning products in that area, Intel effectively: 1. Allows AMD to compete, but only for scraps. This gives the whole monopoly argument less teeth and says effectively, whether or not we did bad things in the past, "we are being nice now. We are not even attempting to make any funny deals in areas AMD has some legitimate product solutions." Intel could push their upper mainstream products downward, and subsidize any losses with the high end product lines, but why do that? It doesn't look good considering their legal entanglements. Besides, AMD will not go away, so they are just accepting less margins for no real effect. Which brings me to..... 2. Wall Street will not accept a slip in margins or ASPs. Lowering the prices on equivalent performing procs to AMD's may result in more sales but will lower margins/ASPs. This may send a mixed signal to investors. Why are you lowering prices? Can't compete? Is the sector soft? Are inventories rising? Everyone panic! 3. Why bother? If AMD cannot answer Intel's upper mainstream and high end, then Intel can have it all and further establish the idea that Intel is the high end of cpu technology. On the inverse, this also says AMD is low end crap and they can have it. Unless, AMD has a compelling offering in the next 12 months, Nehelem lines will waterfall down and outperform AMD solutions at the same price. All Intel has to do is wait. Besides, no one is buying that much anyway, then why accelerate the process now when you can let this happen naturally. AMD can't supply the whole market so Intel can get rid of the old 45nm stock out the door for the highest price possible. In sum, less than 12 months from now, AMD is stuck and they won't be able to hold price as Nehelem of today gets pushed down the product chain. AMD has to come up with more compelling offerings or find innovative niches to fill until Bulldozer or they will have trouble. That is why I am looking for an exit in Q1 or Q2. However, as I repeat over and over, if AMD can move their breakeven downward, then they may be a compelling buy so long as they can maintain or improve margin. The key to me is a much lower breakeven point so when bulldozer comes, and when nvidia collapses, AMD will be a ultra lean fighting machine that can sell superior procs (assuming bulldozer is stellar) for a lower price against Intel, while selling graphics cards for whatever the market will bear. Otherwise, AMD will have to redefine itself and give up the fight against Intel for the high end. The resource, knowledge, and technology gap will simply be too great if AMD can't get moving. Bulldozer has to be perfect, but running the company's operations has to be even better. Otherwise, when you can't innovate, make what you got cheaper to make.