Now Hear This!

What a year it's been at AMD. Executive changes, layoffs, continuing losses on revenue gains, exits from non-core businesses, and a manufacturing spinout all served to redirect the struggling MPU maker since its 2007 analyst day here in NY. 

It should be noted that AMD has made good progress in its efforts to get back on course and maintain itself as a viable MPU contender to Intel. But in the last six to eight weeks the markets have changed substantially, and the tight-lipped company needs to share more information on its strategy if it hopes to return to Wall Street's, as well as the tech world's, favor.

When the analyst community gathers at AMD's 2008 analyst day in Sunnyvale tomorrow, it will surely be armed with some important questions as to AMD's long-term plans. I'm based in NY and won't be there, but below are a few questions attendees most likely will—and should—ask.

What are your plans for netbooks and MIDs (mobile Internet devices)?
These growing device categories offer tremendous opportunity. Intel has put forth its Atom line, but AMD has yet to counter to the extent of its rival. When a financial analyst brought up Intel's Atom on AMD's Q3 call in mid-October and the "high-growth" netbook segment looking for more on AMD's product strategy, CEO Dirk Meyer gave few details (an all too typical AMD response).  

Meyer acknowledged that AMD has strategies with its OEMs for pushing its technologies down into smaller form factors and lower notebook price points, but said the question was too "complicated to answer over the phone," and promised to talk more about it at the analyst day. "We will show at the analyst conference pictorially how we think about the notebook market. Clearly, the so-called netbook is a new form factor, a new market opportunity and one that we are not participating in right now today," he said on last month's call. I hope the attendees at tomorrow's event hold him to those statements, especially after analysts cut their estimates for AMD earlier this week on weak PC market demand.

When will the bleeding stop?
When I posted a preview to AMD's 2007 analyst day in December, I noted that the company's stock had fallen "below the $10 mark in recent weeks for the first time since 2003." Stockholders dream of $10 points now; the stock is trading below the $3 mark this afternoon. True, the price fall is in part due to the financial crisis' impact on all stocks, but it's also due to AMD's continued losses in Q3 (despite company promises that AMD would show profit by the September quarter)  and its refusal until recently to disclose plans for "asset smart" manufacturing. At this point, AMD is in survival mode, looking for transfusions where it can get them. 

Are there further plans to exit businesses?
Transfusions for AMD come in the form of M&A activity and sales: Sell off a non-core business, take the cash, and refocus on core work. The company just did so with the sale of its DTV group to Broadcom, but, unfortunately, it sold the unit for about $50 million less than it had planned because of anticipated low Q4 revenue from the business. What will AMD put on the block next?

Now that you've outlined "asset smart" plans, can you share more details?
After a full year of questions from investors and analysts (not to mention press, see "AMD: Let's start with what's in the glass ... ")  on its manufacturing plans, AMD in October provided some information on its asset-lite efforts, stating it would create a separate manufacturing company with investment from Abu Dhabi-based Advanced Technology Investment Co. Yet the company left many questions unanswered, like "What will standalone margins look like after the manufacturing deal is closed?" and "How will this deal proceed given your cross-licensing agreements with Intel?" and "Exactly how will a new manufacturing operation with little capital-spending budget compete against the likes of TSMC and UMC?" AMD offered a dribbling of information on its plans, but investors and analysts still want to know what's in the glass before they drink up.

Has "Shanghai" been shanghaied?
All recent AMD statements suggest that the quick answer to that question is most likely, "no, it's on track." But after AMD's quad-core Barcelona botch last year, which saw the MPU maker launch the server chip late on delays and design “glitches” (ones that really hammered the company's reputation), the analyst community will be looking for hard facts and dates concerning AMD's Shanghai line. The company stated on its September quarter call that 45-nm Shanghai CPUs for servers began shipping in Q3 and that a full-scale Q4 launch was planned.

You, AMD, have cut more than 10% of staff, too many of which were engineers. How will you continue to compete innovation wise?
OK, maybe the Wall Street watchers who attend analyst days won't think to ask that question, but it should be noted. What's good for cost reduction isn't always good on the long-term technology front. AMD has scaled back on talent significantly, as recently as last week announcing another 500 employee cut after its 10% trimming earlier this year.

Are you lowering sales guidance?
Look for a revised Q4 forecast from the company tomorrow. AMD, as did its rival Intel, reported on Q3 numbers early in the season. Meyer described the December quarter outlook as "murky" at that time, estimating Q4 revenue of just about $1.6 billion, down from Q3's $1.8 billion. As I state above, the markets have changed substantially in the last few weeks. Don't be surprised if AMD reduces its Q4 guidance a bit.

What do you expect to come from AMD's analyst day tomorrow? And what do you think of the points made above? Share your thoughts below.