May 8th, 2008
AMD turns away from Intel fight
Advanced Micro Devices’s annual meeting today was a surprisingly placid affair, considering its share price has nearly halved in value over the past year.
Existing directors were re-elected without a murmur and there was only one question from the floor: a stockholder asking if AMD would consider sponsoring golf tournaments.
Hector Ruiz, chief executive, is under more pressure from analysts, questioning whether AMD can continue in its present form and whether it can return to profitability this year after six consecutive quarters of losses.
The stock is up 13 per cent in the past week on analyst speculation that AMD could be split into two - a manufacturing business and a chip design and development one.
Mr Ruiz said progress was being made towards an “an asset-smart strategy” and he would give an update on this “complex undertaking…in the very near future.”
He said AMD would spend only $900m in capital expenditure in 2008, it was cutting its workforce by 10 per cent and this reduction in expenses would bring down the break-even point by hundreds of millions of dollars, making him confident of a return to profitability in the second half.
AMD would do fewer things better, he said, and get out of non-core businesses that did not have “a clear path to profitability.”
Production problems with its quad-core “Barcelona” family of processors were now behind it, he added, and AMD was on course to begin quad-core production on chips with more economic 45-nanometre circuit widths in the second half - about a year behind Intel.
His most intriguing comment on the battle with Intel was: “We are re-architecting the business so that our financial success is not invariably dependent on continued component performance leadership over a rich and dominant competitor.”
That is as close as AMD is likely to come to admitting defeat, having gone toe-to-toe in recent years with Intel, exchanging processor-advance punches.
Intel now appears to have a decisive lead in the x86 processor market that the two dominate. Mr Ruiz is suggesting his company will focus on expanding in other areas such as graphics chips or targeting specific segments such as processors for small businesses, in order to grow its own business in the future.


















