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I've been recently reading reports from some of my banking friends (and actually chatted with some folks I know at AMD) because I'm curious about AMD's turnarou

by arcanus 10y ago

I've been recently reading reports from some of my banking friends (and actually chatted with some folks I know at AMD) because I'm curious about AMD's turnaround. Even just last year AMD looked to be in very dire straights, and are still operating at a loss. However, they seem to have a strong technical pipeline and they have historically punched above their weight-class. Does it look like they are going to make it?

koolba 10y ago
AMD seems to operate like a middle America mom and pop sandwich shop. Products are decent, lots of people rooting for them to succeed, they never seem to pull ahead, yet they also manage to live on (if only to continue their struggle).
- PedroBatista 10y ago
  Story of my life.
tcoppi 10y ago
I don't think they are in any danger of bankruptcy. Whether they return to profitability is still an open question but it seems likely that they should be by some point next year. How profitable, and what happens after that, is anyone's guess. There is a lot of room to grow in the graphics and CPU space, but they have tough competitors. I do think their stock is very fairly valued at ~$6 though, I think any potential gains from Zen over the next year or so are priced in to that. It definitely isn't a value buy anymore. Edit: As the day goes on it seems like they're trading back over $7, so obviously the market disagrees with me :) They were trading around $10 before losing profitability, and in the $20-$40 range during their mid-2000s heyday, so maybe the market is expecting performance closer to that. I think that is optimistic still, but again who knows.
- blueprint 10y ago
  IMHO it's not actually possible for something to ever be 100% priced in, which has the surprising meaning that people need to also discuss how much of an event is priced in when they speculate whether something is or isn't priced in.
  - eximius 10y ago
    Why is it impossible?
    - blueprint 10y ago
      It can be virtually guaranteed that not everyone who might buy or sell will know about and properly understand a given event.
      - eximius 10y ago
        People can be correct for the wrong reasons, though. Wisdom of the crowds (and the Central Limit Theorem) would make me expect that it would be very close is most cases, with random noise being the most common distance from the truth.
    - deleted 10y ago
      [deleted]
  - vanattab 10y ago
    Can you elaborate on your meaning?
    - blueprint 10y ago
      Please see my reply to eximius.
  - deleted 10y ago
    [deleted]
  - Obi_Juan_Kenobi 10y ago
snovv_crash 10y ago
The issue is the long lag time between new ideas being implemented at a design level, and the many iterations of fabbing and tweaking that need to take place before it can actually be sold. The majority of people in tech are too used to something being written in the morning and deployed in the afternoon to understand what it is like having a 3-month lag in your testing cycle, and minimum twice that till release. Just like Intel had the P4 hole that it had to drag its way out of, so now AMD has had Bulldozer. Notice how Intel has been quite conservative with each individual tick/tock, trying to keep their pipeline full. Doing crazy changes risks causing a pipeline stall which could last years. Each new architecture is risky, and AMD screwed up with Bulldozer. From early signs it looks like Zen is a winner, hopefully AMD can stick with it for a while.
- tormeh 10y ago
  I think bulldozer was just ahead of its time. I am fortunate to have one, and it has aged a lot better than the same-price alternatives from Intel due to the more multithreaded nature of e.g. games nowadays. That's not much comfort for AMD, since being ahead of your time is just another way to fail, but at least AMD had vision. Mankind Divided's recommended specs are FX-8350 or i7 3770. The price difference between the two in their heyday was $100 in AMD's favor.
  - merb 10y ago
    price was always in AMD's favor. problem is more and more the energy consumption. also the i-series of intel was really really solid and good, at least until broadwell (didn't seen too much skylake yet). that especially lost amd a lot of ground in the server space. and a lot of "high end" gamer favored the Intel i7 series aswell, even when they weren't as cheap as amd.
    - tormeh 10y ago
      The i7 was a lot better for gaming than the 8350 was at the time. Hell, an i3 was better at the time. The 8350 was priced accordingly. There was no price advantage. What I'm saying is that AMD's design has aged a lot better.
mtgx 10y ago
> Does it look like they are going to make it Probably, but I still think they would do far better with an owner like Qualcomm (granted Qualcomm would still have enough money in the bank to actually do something interesting with AMD after the acquisition).
- tcoppi 10y ago
  Any acquisition of AMD will be seriously complicated by potentially needing to re-negotiate the patent cross-licensing agreements with Intel. There are lots of companies that could have been great buyers for AMD in the past that have passed or not even looked into it because of this, I don't think it will change for the foreseeable future unfortunately.
  - arcanus 10y ago
    > re-negotiate the patent cross-licensing agreements with Intel I've always wondered why intel does not buy AMD... is it just because of an expected anti-trust lawsuit? With Nvidia, ARM, IBM, it does not seem that a monopoly in x86 would dominate ALL architectures, but perhaps it would not be viewed that way.
    - tcoppi 10y ago
      Probably anti-trust, otherwise I think Intel would have bought them a few years ago just for the huge discount on their graphics division, which Intel has never seemed to be able to do well.
barkingcat 10y ago
There is an extremely long lag time between research, development, product, and having that reflect in the financial numbers. I'd say it's on the scale of 6 or 8 years. So whatever dire straights or whatever recovery that you see now, was in the works since the early 2010's. Whatever is happening in the company now is what you will be seeing in 2021 or 2023. Whether they will make it depends on how well the managing team handles that long lead time - for their leaders to give the engineers and product people as much time as possible to keep the company alive until each product comes into being.
- phonon 10y ago
  Well, Jim Keller returned to AMD August 2012, so I would say around then :-)
  - vanattab 10y ago
    And then left AMD in Sep 2015 to join Tesla in Jan 2016 as Vice President of Autopilot Hardware Engineering.
    - daveguy 10y ago
      After completing the Zen design. From leaked benchmarks it looks like he did an excellent job on the design (yet again) and they have been testing and ramping up for fabrication since he left. After they have milked this design with iterative improvements for 5-10 years maybe he will come back for the next generation.
      - Tuna-Fish 10y ago
        He did not just complete Zen, he completed the high-level design of Zen and it's two successors. CPUs are designed in a pipelined manner -- once the high-level team finishes up their work and passes it on to the low-level guys, they immediately start working on the next version, with the first version still years away from release. The total cycle from drawing board to store shelves is >5 years, and the skill sets required of high-level designers are very different than those required to turn it into silicon, so this just allows them all to have something to work on. The long lag time is why chip companies can have disasters like P4 or Bulldozer, and they last so long. When some of the basic assumptions are wrong, the designers won't actually find out until after the design hits silicon, at which point the next two versions are already pretty much locked.
VanillaCafe 10y ago
This has been the same story of AMD for approximately 20 years.
VT_Drew 10y ago
>and are still operating at a loss. No their not, there Q2 financials had them in black.
vegabook 10y ago
What you have to keep in mind, is that AMD is valued at a quarter of Nvidia, and at 1/25th of Intel. Therefore the market has a huge scepticism discount built in. AMD doesn't have to hit the ball out of the park with Zen. It just needs to get to 85% area of Intel at same tdp, and the market will call it a winner. If it does 95%, call AMD stock 50% undervalued, minimum. Obliquely, also remember that while Nvidia is winning on the "pure" GPU front with the awesome 1080 etc, the major problem for Nvidia is that its tech needs a host processor, and its ARM attempts are going nowhere (Nintendo NX notwithstanding). AMD does not face this problem. It's becoming clearer that pure-parallel is not always optimal. Hybrid GPU/CPU architectures have a lot of upside as we are seeing with the Xeon Phi use cases, which smackdown on Nvidia bigtime as soon as you mix even the slightest bit of dependency in your algorithms. I am very bullish on AMD. I believe its stock has double potential, because the price is so catastrophically pessimistic already. And without even talking market valuations, I think we have had enough of monopoly-style price gouging on Xeon and Tesla.

by arcanus 10y ago

koolba 10y ago

AMD seems to operate like a middle America mom and pop sandwich shop. Products are decent, lots of people rooting for them to succeed, they never seem to pull ahead, yet they also manage to live on (if only to continue their struggle).

PedroBatista 10y ago
Story of my life.

tcoppi 10y ago

I don't think they are in any danger of bankruptcy. Whether they return to profitability is still an open question but it seems likely that they should be by some point next year. How profitable, and what happens after that, is anyone's guess. There is a lot of room to grow in the graphics and CPU space, but they have tough competitors. I do think their stock is very fairly valued at ~$6 though, I think any potential gains from Zen over the next year or so are priced in to that. It definitely isn't a value buy anymore. Edit: As the day goes on it seems like they're trading back over $7, so obviously the market disagrees with me :) They were trading around $10 before losing profitability, and in the $20-$40 range during their mid-2000s heyday, so maybe the market is expecting performance closer to that. I think that is optimistic still, but again who knows.

blueprint 10y ago
IMHO it's not actually possible for something to ever be 100% priced in, which has the surprising meaning that people need to also discuss how much of an event is priced in when they speculate whether something is or isn't priced in.
- eximius 10y ago
  Why is it impossible?
  - blueprint 10y ago
    It can be virtually guaranteed that not everyone who might buy or sell will know about and properly understand a given event.
    - eximius 10y ago
      People can be correct for the wrong reasons, though. Wisdom of the crowds (and the Central Limit Theorem) would make me expect that it would be very close is most cases, with random noise being the most common distance from the truth.
  - deleted 10y ago
    [deleted]
- vanattab 10y ago
  Can you elaborate on your meaning?
  - blueprint 10y ago
    Please see my reply to eximius.
- deleted 10y ago
  [deleted]
- Obi_Juan_Kenobi 10y ago

snovv_crash 10y ago

The issue is the long lag time between new ideas being implemented at a design level, and the many iterations of fabbing and tweaking that need to take place before it can actually be sold. The majority of people in tech are too used to something being written in the morning and deployed in the afternoon to understand what it is like having a 3-month lag in your testing cycle, and minimum twice that till release. Just like Intel had the P4 hole that it had to drag its way out of, so now AMD has had Bulldozer. Notice how Intel has been quite conservative with each individual tick/tock, trying to keep their pipeline full. Doing crazy changes risks causing a pipeline stall which could last years. Each new architecture is risky, and AMD screwed up with Bulldozer. From early signs it looks like Zen is a winner, hopefully AMD can stick with it for a while.

tormeh 10y ago
I think bulldozer was just ahead of its time. I am fortunate to have one, and it has aged a lot better than the same-price alternatives from Intel due to the more multithreaded nature of e.g. games nowadays. That's not much comfort for AMD, since being ahead of your time is just another way to fail, but at least AMD had vision. Mankind Divided's recommended specs are FX-8350 or i7 3770. The price difference between the two in their heyday was $100 in AMD's favor.
- merb 10y ago
  price was always in AMD's favor. problem is more and more the energy consumption. also the i-series of intel was really really solid and good, at least until broadwell (didn't seen too much skylake yet). that especially lost amd a lot of ground in the server space. and a lot of "high end" gamer favored the Intel i7 series aswell, even when they weren't as cheap as amd.
  - tormeh 10y ago
    The i7 was a lot better for gaming than the 8350 was at the time. Hell, an i3 was better at the time. The 8350 was priced accordingly. There was no price advantage. What I'm saying is that AMD's design has aged a lot better.

mtgx 10y ago

> Does it look like they are going to make it Probably, but I still think they would do far better with an owner like Qualcomm (granted Qualcomm would still have enough money in the bank to actually do something interesting with AMD after the acquisition).

tcoppi 10y ago
Any acquisition of AMD will be seriously complicated by potentially needing to re-negotiate the patent cross-licensing agreements with Intel. There are lots of companies that could have been great buyers for AMD in the past that have passed or not even looked into it because of this, I don't think it will change for the foreseeable future unfortunately.
- arcanus 10y ago
  > re-negotiate the patent cross-licensing agreements with Intel I've always wondered why intel does not buy AMD... is it just because of an expected anti-trust lawsuit? With Nvidia, ARM, IBM, it does not seem that a monopoly in x86 would dominate ALL architectures, but perhaps it would not be viewed that way.
  - tcoppi 10y ago
    Probably anti-trust, otherwise I think Intel would have bought them a few years ago just for the huge discount on their graphics division, which Intel has never seemed to be able to do well.

barkingcat 10y ago

There is an extremely long lag time between research, development, product, and having that reflect in the financial numbers. I'd say it's on the scale of 6 or 8 years. So whatever dire straights or whatever recovery that you see now, was in the works since the early 2010's. Whatever is happening in the company now is what you will be seeing in 2021 or 2023. Whether they will make it depends on how well the managing team handles that long lead time - for their leaders to give the engineers and product people as much time as possible to keep the company alive until each product comes into being.

phonon 10y ago
Well, Jim Keller returned to AMD August 2012, so I would say around then :-)
- vanattab 10y ago
  And then left AMD in Sep 2015 to join Tesla in Jan 2016 as Vice President of Autopilot Hardware Engineering.
  - daveguy 10y ago
    After completing the Zen design. From leaked benchmarks it looks like he did an excellent job on the design (yet again) and they have been testing and ramping up for fabrication since he left. After they have milked this design with iterative improvements for 5-10 years maybe he will come back for the next generation.
    - Tuna-Fish 10y ago
      He did not just complete Zen, he completed the high-level design of Zen and it's two successors. CPUs are designed in a pipelined manner -- once the high-level team finishes up their work and passes it on to the low-level guys, they immediately start working on the next version, with the first version still years away from release. The total cycle from drawing board to store shelves is >5 years, and the skill sets required of high-level designers are very different than those required to turn it into silicon, so this just allows them all to have something to work on. The long lag time is why chip companies can have disasters like P4 or Bulldozer, and they last so long. When some of the basic assumptions are wrong, the designers won't actually find out until after the design hits silicon, at which point the next two versions are already pretty much locked.

VanillaCafe 10y ago

This has been the same story of AMD for approximately 20 years.

VT_Drew 10y ago

>and are still operating at a loss. No their not, there Q2 financials had them in black.

vegabook 10y ago

What you have to keep in mind, is that AMD is valued at a quarter of Nvidia, and at 1/25th of Intel. Therefore the market has a huge scepticism discount built in. AMD doesn't have to hit the ball out of the park with Zen. It just needs to get to 85% area of Intel at same tdp, and the market will call it a winner. If it does 95%, call AMD stock 50% undervalued, minimum. Obliquely, also remember that while Nvidia is winning on the "pure" GPU front with the awesome 1080 etc, the major problem for Nvidia is that its tech needs a host processor, and its ARM attempts are going nowhere (Nintendo NX notwithstanding). AMD does not face this problem. It's becoming clearer that pure-parallel is not always optimal. Hybrid GPU/CPU architectures have a lot of upside as we are seeing with the Xeon Phi use cases, which smackdown on Nvidia bigtime as soon as you mix even the slightest bit of dependency in your algorithms. I am very bullish on AMD. I believe its stock has double potential, because the price is so catastrophically pessimistic already. And without even talking market valuations, I think we have had enough of monopoly-style price gouging on Xeon and Tesla.