Now Hear This!

Advanced Micro Devices Inc. will be in New York Thursday for its analyst day and should be ready to be hit with some tough questions from the analyst and press communities. 

The number 2 MPU maker’s execs haven’t been together in one room and open to questions in a while. And, given the year the company has had, they should be ready for some heat – center of the sun heat. Below are 5 questions I expect to be on the tips of some very sharp tongues tomorrow.

Can AMD stop the bleeding? AMD’s stock has taken a nose dive and dropped by more than half this year. It fell below the $10 mark in recent weeks for the first time since 2003. Trading at $8.88 as I write this blog post, the stock reminds me of days that should have been in the past, days when AMD MPUs were considered a joke compared to Intel’s presence in the market. Couple that with the company’s recent losses – $396 million last quarter alone – and a material charge from its ATI acquisition that the company announced this morning, suggesting that perhaps it overpaid in the $5.4 billion acquisition of ATI,  and one has to wonder if AMD can stop the bleeding or if Intel will soon crush them once and for all.

What happened and is happening with Barcelona? The quad-core processor was late to market,  but did finally arrive in September,  then faced rumblings of supply chain issues in October, and AMD this month said a “glitch” caused a near full stop of Barcelona shipment. Details on what went wrong and what’s going on to fix the ramp will undoubtedly be requested.

How is the “asset lite” strategy changing at AMD? Analysts have suggested that AMD has been cozying up to top foundry TSMC in recent quarters. Indeed, part of AMD’s Spider platform, the company’s latest and greatest headline grabber, are manufactured on TSMC’s 55-nm process technology. It has also been suggested AMD has been in talks with its buddies at IBM and its primary foundry Chartered Semiconductor Manufacturing. All in all, it suggests that AMD is looking to diversify its foundry partnerships. It has also suggested to some that AMD might be looking to go fabless. The idea that AMD would not make any chips would be a significant change of business model for the company, but it does play into the below question …

Has Apple been courting AMD? In light of the possible changes to its asset-lite model and the hard times AMD has faced in 2007, some have suggested Apple Inc. may be looking to buy AMD. While I think the idea is a little far fetched, reader comments on a recent blog we posted on the possibility prove the topic is worth debate.  

And finally,
Ruiz, are you in or out? Fueled by rumors that stretch back as far as January, reports surfaced this week that CEO Hector Ruiz will be stepping down and handing the torch to Dirk Meyer, AMD’s president and COO. Meyer took on the president role with his last promotion to shift some responsibility from Ruiz and was named to the board in November. But Ruiz reportedly has told CNBC Europe that, while he has been grooming Meyer, he has no plans to leave AMD soon. Ruiz’s contract with the chip maker comes up in April.

Share any thoughts you have on AMD below.

--Suzanne Deffree, Managing Editor, News