Now Hear This!

Apr 18 2008 12:40PM | Permalink | Email this | Comments (5) |
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I’m starting to wonder if Hector Ruiz and Bob Rivet were monks in a past life because they sure do have a vow of silence thing going on over at AMD.

The CEO and CFO, respectively, gave little to no detail in the MPU maker’s Q1 statements on possibly the two most important factors for the company going forward: non-core business exit strategies and manufacturing. (See our news story, “AMD posts down Q1, future cloudy,” for the full financial scoop.)

As to possible non-core business exits, the safe bet is on consumer electronics. It’s a poorly performing segment -- in fact was the only one of AMD’s three businesses that saw a sales loss both sequentially and year-over-year basis -- at AMD and takes a huge amount of R&D dollars. But Hector and Bob did not state what non-core business would be “intensely scrutinized” more than others, if any. Analysts asked for color on AMD’s Q1 conference call, but didn’t get much. When asked for a timeline, Hector’s answer was “as quickly as we can” and that the company is on a “fast path” to do so.

On manufacturing, it has been suggested (both in this blog and by analysts) that AMD should move to a fabless model. Doing so would allow it to focus on design, perhaps allowing it to catch up to Intel; shed high-cost manufacturing initiatives; and make some quick cash by selling its fabs, giving it a leg up toward profitability. AMD currently runs what it calls an “asset-smart” strategy, which is basically a shift toward a fab-lite strategy. Yet when asked for more detail on its manufacturing strategy on Thursday’s conference call Hector said: “I feel terrible that I can’t provide details and I hope to do so soon.” Gosh, the execs at AMD sure do feel bad a lot.

Their tight-lipped, remorseful approach is nothing new and its starting to come off as pure lip service. The last time I saw AMD’s management in person was in December at the company’s financial analyst day here in New York. (See “AMD seeks profitability, says Barcelona botch won’t be repeated”) At that event they spent much of their time in a mea culpa stance, apologizing and saying they were “humbled” by the Barcelona botch. Yet, when analysts pressed for information as to how AMD would reach profitability, what was happening with its planned upstate New York fab and manufacturing, and technical details on the Barcelona design issues, questions were waved off with vague (and somewhat insulting) answers.

Could it be the company is still playing around with plans? Could it be the company has its plans nearly set in stone, but will make major management changes in the near-term? CTO Phil Hester resigned last week rather suddenly; will more execs follow him out the door? (How many stockholders would love to see Hector escorted out at this point?) Does AMD even have plans past the next 90 days or is the company just making things up as it goes along at this point? One has to wonder. (Magic 8 Ball, do we sell our fabs? Ask again later. Sigh …)

No matter what AMD’s logic is behind withholding details from the financial community, it’s wrong -- flat out wrong -- to do so at this point.

There’s still a glimmer of hope for AMD. Analysts noted positives like flat MPU ASPs (average selling prices) in a downward ASP marketplace, Barcelona B3 and how it will have a full 13 weeks play in Q2 opposed to just three weeks in Q1, OEM agreements, and ATI Radeon moves. But glimmers aren’t enough to help the stock price and this afternoon it continues to hover near its 52-week low at about $6.15.

Share your thoughts on AMD’s Q1, it’s vague plans for business exits and manufacturing, or anything else below.

--Suzanne Deffree, Managing Editor, News