All you Negative Nellies who've been down on AMD lately, listen up. Sure, things have been bad this year for the world's number two chipmaker. Okay, they've been really bad. And following the company's recent admission that it overpaid for the acquisition of graphics card maker ATI, as well as the surfacing of a technical glitch in its new quad-core Barcelona chips, you may be inclined to say things have even gotten worse. Resist that temptation.
AMD executives know you're worried, but they also think there's no cause for alarm. In fact, when it comes to churning out world-class processors and staying competitive with larger rival, Intel, the "glass is definitely still half full." More importantly, the company reaffirmed that its various partners desperately want AMD in the processor game. Put simply, you can give all those gloom and doom forecasts a rest -- it's really starting to piss off CEO Hector Ruiz (pictured above).
"At the risk of sounding like I'm really ticked off (which I am), I gotta ask …how in the hell could anyone conclude that our company is worth 40 percent less today than it was just a few weeks ago?" said Ruiz at this morning's AMD financial analyst meeting in New York. While he did admit his company had made some relatively big mistakes over the past year, AMD's steward reassured the analyst community and Wall Street that despite the recent $400 million loss in the first quarter, the chipmaker is well on its way to becoming a profitable company once again. In fact, it's goal number one for the time being.
"Hey, look, I understand we made some commitments, especially on quad core, that we did not meet. Shame on us," Ruiz continued. As he puts it, those missteps were the result of today's complex technological environment, and the fact that the company had become "complacent" about its four years of success in the industry.
"We blew it, and we're very humbled…" Ruiz said.
But despite all the recent setbacks, company executives still see a bright future ahead of the Sunnyvale-based chipmaker. Armed with a new under-promise, over-deliver mantra, Ruiz told the assembled audience on Thursday that "we expect to exit the second quarter (of next year) at a break even rate." Profitability should come shortly thereafter, he said, by Q3 or Q4 at the latest.
Ultimately, AMD executives see hope in the fact that whatever funkiness is going on in the economy, the chip industry is still growing at a rapid pace. That presents AMD with a buffet of new product opportunities, said Bob Rivet, AMD's CFO, as its quad-core Opteron chips hit the commercial desktop server segment early next year and the company expands even more into the DTV panel space.
"There's a lot of profit in those pools that we will attack, that will lead to profits," Rivet said, adding that "we're not going to cut our way to prosperity."
And while there might not be cuts, part of this new "maniacal focus on profits" will entail reigning in both R&D and G&A (general and administrative) spending.
"We will be profitable in 2008," Rivet said. "But it's a journey."
