VR World » Hector Ruiz

AMD should be lead by Lufthansa’s CEO

Theo Valich — Fri, 23 Jan 2009 01:33:42 +0000

Following our story announcing the quarterly call, we waited until 11PM CET and listened to the call. Quite frankly, this call was worse than I expected. The loss was 1.42 billion USD, or 2.34 per share – and the share itself is now worth less than two dollars ($1.96 during after-hours). Sales dropped down to 1.16 billion USD, 33% less than in previous quarter.

People that were allowed to ask a question once more failed to ask the tough questions, and one must wonder what the heck is going on and why nobody dares to the really rough questions, such as whose responsibility was that a company that invented netbook market failed to cash in on the deal, why did AMD pay 5.4 billion USD for the company which now values at 2.1 billion USD, or roughly twice the market cap of the whole company (ok, “roughly” – AMD’s mkt cap is 1.23 billion USD).

Personally, I am saddened at the fact that AMD slept on its laurels for too long with 90nm procesors and that some of brilliant people, people that created the success in commercial market for the first time in AMD’s history – are no longer at the helm of the company. Seeing AMD now is just a pain – so many good people work night and day and create truly great products, but the management just isn’t there. AMD’s management should be on court to explain to its customers and shareholders who is responsible for losing 7 billion dollars in the past nine quarters and stock dropping from 46 USD to less than two dollars! One must ask him/herself… when is AMD going to wake up and smell the coffee? AMD should be headed by Dave Orton and S&M division should be lead by Henri Richard.

Or, here is a crazy wild card… yes, you may pronounce me insane, but the person that AMD needs is no other than Wolfgang Mayrhuber. Wolfgang who, you might ask… he is CEO of Lufthansa Group, quite frankly the most profitable airline in a year that saw other airlines losing billions of dollars due to crazy prices of oil and worldwide recession. By leading Lufthansa Group, Wolfgang proved to be the best man for a tough industry and took a company that was really strong in Europe and turned it into one of largest and probably the most profitable airline. Wolfgang will leave the company this summer, mandatory by internal policy of Lufthansa Group.

Can this guy bring sweetness of AMD's product line to currently bitter taste of AMD's financial results?

His next spot is probably either at the helm of Star Alliance, succeeding his predecessor in Lufthansa, or maybe replacing Mr Glenn Tilton from United Airlines. However, if Mr. Mayrhuber is tired of battling all those lost battles with moronic members of media who claim that planes pollute the planet the most (with less than 2% overall CO2 share… and are the most economical and ecological way to transport large number of people… but nevermind that)… maybe, but just maybe – Mr. Mayrhuber should think about taking helm of AMD and turning the tide on this company. Who knows, if AMD would end up with Mr. Mayrhuber from Lufthansa, John Leahy from Airbus SAS or getting Henri Richard back… there might be something to write about besides numerous write-offs and remembering how rich people like former CEO became. All engineering projects in the company should be lead by former ATI people… Raja Koduri should be the CTO for the whole company, while the CPU team should be integrated in AMD GPG – because this is NOT the way to go. Intel US had to eat the humble pie and let Intel Israel to bail out the mother company and its sinking Pentium 4 ship (or chip). Result was Core architecture, or nothing else but sheer brilliance of engineering teams. AMD’s “Intel Israel” is no other than AMD GPG in Santa Clara, Boston, Orlando and Markham (pardon if I am leaving anybody out).

Whoever is the next or current CEO of AMD, he should be paid $1/year plus 1M stocks/year, NOT a 20% salary cut when the company is bleeding billions of dollars. “Virtual” (write-off) and real ones.

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Analysts lower expectations for AMD, disclose overly payment for ATI

Theo Valich — Thu, 22 Jan 2009 14:36:15 +0000

AMD will held its quarterly results conference call today at 5PM EST (17:00 EST, 23:00 CET), and unlike conference call for the past quarter, this one will be a hard one.
We’ll list some tidbits from report made by Patrick Wang of Wedbush Morgan Securities. For starters, Wedbush Morgan estimates that AMD will report Q4 revenues of US$ 1.2B, which is 25% down on QoQ basis (excluding the infamous sale of Fab30 equipment to Russians in Q3 results), resulting in a loss of $0.54 per share.

Due to AMD’s shaky position in commercial/enterprise segment, AMD suffered more greatly than Intel did, given the fact that AMD gets 70% of its revenues from consumer segment. As ATI (AMD GPG) gained ground and put pressure on Nvidia, it suffered the blow in the results, but still – don’t expect great results in GPU segment.

When it comes to looking into the crystal ball, Wedbush Morgan is keeping its price target down to $2.00 in the next 12 months (current share price: $2.25). This pessimism is a consequence of almost 10 consecutive quarterly losses and if we want to be honest, AMD didn’t exactly executed well as a company. Some parts did brilliantly, but some parts didn’t do well.

Fab spinoff or MAD AMD is now awaiting Feb10 shareholder vote, and we will probably see the birth of new company at CeBIT 2009.

Given the echo of current economic situation, Wedbush estimates that AMD’s revenue for Q1’09 will be 10-20% lower than current quarter, somewhere in $1.0B range, with further losses. The firm expects that gross margins will “remain under pressure in pricing, mix and minimal 45nm”.

While reading the report, it was interesting to read that AMD has to take additional goodwill impairment charge of $0.62B, bringing the total write-off to 3.2 billion USD. Given the fact that AMD paid 5.4 billion for ATI Technologies, it is more than obvious that CEO at the time, Hector Ruiz did a gross mistake when he overpaid more than three billion for the company. We cannot go into the gory details, but I personally wonder why shareholders didn’t sue AMD leadership when they had the chance… now all is said and done, and there is nothing else but to leave Dirk and his team to fix the company that Hector broke. Sadly, that is too late for many good men that left the company while Hector was in charge.

AMD did introduce temporary pay cuts, reduced its workforce by additional 1100 employees (not 900), probably targeting to once more employ around 15,000 – down from 17,000 at its peak. According to AMD’s Corporate Information, the company currently employs 16,500 people around the globe.

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AMD keeps on killing its saviors, continues malicious benchmark practice

Theo Valich — Sat, 08 Nov 2008 05:00:22 +0000

When it comes to AMD, this is the one company that is really a talent when it comes to destroying its own golden gooses.
Sometimes out of knowledge, sometimes out of pure malice, the company’s heart is far from one that was the core when Colonel Sanders was in charge. The company that Sanders lead was always on the edge, but it was that edge that created AMD K7 and K8 architecture (NexGen), it was the edge that went into sponsorship deal with Ferrari and commanded with 45% of 4P server space (for a while). Reactive AMD was the one that stopped investment in 65nm development and kept on milking 90nm process until Intel came out with Core 2 architecture and flat-out destroyed AMD CPUs on both power and performance fields. That reactive AMD is continuously talking about Nvidia’s The Way It’s Meant To Be Played program instead of promoting its own, and of course, that reactive AMD is quick on releasing smart people and relying on AMD’s Sludge as one high-ranked AMD official (still employed by AMD, btw) commented company’s core people in Sunnyvale and Austin.
A while ago, Dave Orton and Henri Richard left the company. Former drove ArtX into limelight and turned ATI Technologies from a “also ran” to a technology and market leader, while Hector Jesus Ruiz can only thank Henri for linking the company with Mubadala Abu Dhabi company and thus, saving up the company that is about to be split in two – as I exclusively wrote here.
However, AMD isn’t exactly a company that is capable of promoting people that turned things around, and it comes as of no surprise that Pierre Brunswick, VP of Sales & Marketing for Russia, CIS and Eastern Europe was let go. Pierre was instrumental in AMD’s sales of Fab 30 equipment to Russians and those $200 million was a key benefactor in stopping AMD from posting yet another devastating loss in Q3’2008.
There is only one small thing that AMD keeps on forgetting – if Intel takes AMD to court in a bid to invalidate AMD’s x 86 licenses, we wonder that will actually stand on AMD’s side of the bench? More and more people are leaving the company and the amount of skeletons they carry around is something that competition can easily scoop out.
At the same time, company is faking Shanghai versus Xeon benchmark results that will be shown to press next week, according to my former publication. Tampering with SPEC scores is something that Apple experimented couple of times and got crucified by technical and mainstream press.

There is just one question that keeps on flying around – with products such as Radeon 4800 series, current 7-series and upcoming 8-series chipset, platforms like Puma – why is this company so keen on invalidating engineering and marketing team’s efforts with continuous bickering and mistreatment of people that are the key drivers of progress in the company.

The original netbook... now, how exactly AMD missed to cash out on this one?

AMD is the company that launched netbook initiative with OLPC project, and then failed to lead and leave Intel with $200M extra revenue per quarter. But that’s just one example – second one is probably the automotive division, with Nvidia snapping lion’s share of upcoming high-tech interfaces inside cars – AMD was used in Ferrari’s F1 and road cars, but now Nvidia Tegra and GeForce 9 are the ones selected to power 3D interfaces inside numerous Mercs, Maseratis, Ferraris, Audis and soon, whole car lineup from VAG Group (Volkswagen, Audi, Seat, Skoda, Lamborghini, Bugatti, Bentley and of course, groups owner Porsche).
When Nvidia snaps up x86 license (from Transmeta?) and Intel comes out with Larrabee, things are looking gloomier for AMD than they are for Nvidia or Intel. Ultimately, there is just one question: why AMD is so desperately want to be the follower, instead of leader?
Personally, I am spending all of my resources to get my company going, and people that are now in the team stride towards nothing else but greatness, to be #1, to make the difference. Time will tell will we succeed or fail, but one thing is sure – we are not building a company looking to follow others. We’re building a company looking at what our target market needs and more importantly, wants. Thus sadly, AMD cannot be our role model – far from it.

P.S. Number of good people that left AMD since the acquisition of ATi: Dave Orton, Henri Richard, Lorenzo Martone, Andrzej Bania, Peter Edinger, Dave Everitt, Suzy Pruitt, Lars Weinand, Andrea Di Giovanni and many, many others. There are still many bright and creative people that I am talking with, but sadly, the trend is just downwards, not upwards.

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Time for earning season madness is here!

Theo Valich — Mon, 13 Oct 2008 17:02:05 +0000

In the light of world economy going bonkers, we have entered two really interesting weeks. Intel will submit its Q3 results after the market closes on Tuesday, while AMD will follow suit on Thursday.
I’ve received a preview for both companies from Wedbush Morgan Securities, and in this post you can read estimates researched by Patrick Wang and his assistant Michael Lucarelli. According to Wedbush Morgan, we can expect “weak 3Q results towards the lower end of guidance as the majority of semi companies have not pre-announced but were most likely impacted by the well-documented macro environment.”
With global economy being in chaos, it is no surprise that Wedbush expects that all major semiconductor companies will have to cut 2009 estimates. Patrick states that “utilization will continue its steep decline in 2H08 and into 1H09″.
However, not all is dark – “as estimates come down, we think investors will start feeling more comfortable with traditional valuation metrics and look for stocks with stories that are fundamentally intact but oversold.”. This just might spells good news for semi stocks.
According to Wedbush, Intel will report its Q3 revenue of around $10.15 billion, and profits in the range of around $0.33 per share, down from projected $10.27B with earning per share in the $0.34 range. However, guidance for Q4 is quite conservative, with current estimate being $10.59B (4.4% higher than Q3), below analyst consensus of $10.85B.
When it comes to AMD, Wedbush expects that AMD’s head honchos will be all over Asset Smart/Asset Lite strategy, followed by the positive news of return to profitability. A while ago, while Hector was at the helm of AMD, he made a promise that the company will be profitable in Q3’2008. We cite following part of the report: “we expect AMD to report Q3 revenue and EPS results of $1.46bn / ($0.39) versus consensus of $1.48bn (+10.1% QoQ) / ($0.40).”
So, revenue should be almost 9% up from second quarter, and AMD stock should experience first profit per share in ages – in a tune of almost 40 cents. This resurgence was lead by graphics sales, which rose way above 18% in Q2. AMD pushed Nvidia with its 4800 series of products, and Wedbush now expects that AMD will score Q4 revenue in a tune of $1.57 billion, roughly 15% up from Q2’2008.
I plan to blog from both calls, so stay tuned for news from both camps, and also to see if Wedbush made all the right calls

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