Discussion in 'Article Discussion' started by Gareth Halfacree, 20 Jan 2016.
Pinning its hopes on Zen.
How do they continue to survive?!? I'd love my company to be able to make a $481 million loss and still operate!
The best part? They're so used to it, they've renamed the row in the table "Operating loss" instead of "Operating income". At least for the quarterly table, anyway. (Which then, confusingly, makes it look like they made a quarterly profit: if numbers in brackets in the operating profit row mean a loss, then numbers in brackets in the operating loss row should surely mean a profit? It doesn't, but it should.)
No!! I just clearly don't understand how someone can continue to pour $100's of millions into AMD. Although for sure, their loss would be strongly felt.
The worrying thing is they have soo many successful projects and still can't turn their fortunes around (i.e. XONE, PS4, APU's, GPU's, etc.!).
I wonder what impact it has had not having a real server competitor has had on them...
Consoles probably are going to end up costing them money as the 7 year life span of console sales means AMD are paying for very old process.
income of around $1 billion a quarter is how:
same reason Tesco`s isn't bankrupt - whereas technically it should be (£4 billion hole in pension fund for example)
Banks fund the losses is the reason company's like AMD and tesco survive. If the banks called in the debts then they know they would lose around $2bil as they would get close to nothing. AMDs most valuable asset is the gpu patents they hold. In a fire sale they would not raise enough to cover the debts though.
But if the gpu bit of AMD is sold off seperately it could easily raise 3-4billion dollars if estimates are to be held as fact. If ZEN fails then we will find out as surely they will start looking for a buyer for there gpu devision which they have been rebranding into a seperate area of the company the last year or so.
Banks might insist on it if they start to show very heavy loses. The next quarter will be difficult and could be interesting just how far in the red they end up pre ZEN. Shares are at there lowest in a very long time.
They need sufficient cash to operate which they currently have. Each time they start to run out (and you need a lot in the bank for cash flow or the company can't operate) they do something to raise some more - credit, selling more shares, selling assets off, firing workforce, etc. If you were doing this to invest in something that's gonna make the company in the future that's one thing, but just doing this to survive is a death spiral.
Just being in a shrinking company is going to doom them in the end. The cost to develop a x86 cpu, and a high end gpu is huge. You've got to have a huge turn over to have any hope of covering the development costs, and AMD's is shrinking. The cpu market must be getting critical now - if you could remove the console revenue to see how many sales the cpu division made it would be a number far to small to justify the huge development costs.
I don't see how AMD can turn that around - Zen is the great hope but realistically it doesn't have a chance of taking on Intel. Intel have orders of magnitude more sales (meaning cheaper production), orders of magnitude more R&D, and start from a huge performance lead. In addition most of AMD's greatest successes came from buying in other companies with the technology, not internal innovation. How can AMD compete?
The gpu division could do with being sold as fast as possible imo. It's being starved too so is falling behind Nvidia - a company AMD/Ati have a much better chance of competing with. Pretty soon the gap will grow too large for them to catch up there too.
Apart from selling the development costs they must get a royalty on each console sold. Unfortunately it's very small though. The benefit they have is that each shrink the console chip has (next is to 16nm for 'slim' devices), AMD will again be paid to (co)develop it and bring to market.
Nintendo next gen will have an AMD part in it too this year.
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