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Category: AMD
November 12th, 2009
Intel to pay AMD $1.25 billion as companies end litigation war; Is it a new chip era?
Intel and AMD on Thursday said they will settle all legal disputes, including antitrust litigation, for $1.25 billion. AMD CEO Dirk Meyer said the settlement ushers in a “new era” in the chip industry. But Intel CEO Paul Otellini was a bit defiant in a conference call this morning, saying that there would be no changes to the company’s business practices because the company has not acted illegally - and added that the New York Attorney General’s complaint against Intel was also without merit.
Under the terms of the settlement, Intel will pay AMD $1.25 billion cash within 30 days. Among other key items (statement):
- AMD and Intel both get patent rights in a cross-licensing pact;
- Intel will give up any patent claims against AMD;
- Intel will agree to adhere to business practice provisions;
- And AMD drops all pending litigation against Intel.
Intel has been under fire from regulators in Europe over its alleged treatment of AMD.
The companies said in a joint statement that more details about the cross-licensing pact, a 5-year deal, and Intel’s business practice agreement will be revealed in filings with the Securities and Exchange Commission.
Other odds and ends worth noting:
November 2nd, 2009
Ruiz resigns as GlobalFoundries chairman; no mention of insider trading scandal
Former AMD CEO Hector Ruiz, who reportedly leaked confidential information as part of the Galleon Group insider trading scandal, will step down as chairman of GlobalFoundries, a manufacturing unit of AMD that was spun off into its own company.
According to a press release issued today by GlobalFoundries, Ruiz will take a voluntary leave of absence from the board, effective immediately. His resignation will become effective January 4.
Board member Alan E. “Lanny” Ross, who was the former CEO of Broadcom, will become interim chairman, effective immediately, until a permanent chairman has been appointed by the board.
The board did not give a specific reason for the resignation, nor did it make any reference to Ruiz’ reported role in the Galleon insider trading scandal. Last month, the FBI arrested six people in a sting - including senior IBM executive Robert Moffat - for their roles in the Galleon scandal, calling it “the largest hedge fund insider trading case in history.”
The ring leader, Raj Rajaratnam, co-founder of the hedge fund firm Galleon Group, allegedly got inside dirt from a bevy of tech executives. The Wall Street Journal reported last week that Ruiz tipped Galleon off to the 2008 reorganization of AMD.
October 27th, 2009
WSJ: AMD's former CEO was a Galleon tipster
The Galleon Group insider trading scandal continues to net some big technology fish. And the Wall Street Journal is reporting that former AMD CEO Hector Ruiz leaked confidential information to Galleon.
The Securities and Exchange Commission nailed Galleon for insider trading. The ring leader, Raj Rajaratnam, co-founder of the hedge fund firm Galleon Group, allegedly got inside dirt from a bevy of tech executives.
Until now the biggest exec was former IBM executive Bob Moffat, senior vice president of Big Blue’s systems and technology group. Ruiz trumps that.
The Journal, citing people familiar with the matter reports, that Ruiz tipped Galleon off to a 2008 reorganization of AMD. AMD spun off its manufacturing unit into a company called Globalfoundries. Ruiz is now chairman of Globalfoundries.
Also: IBM’s Moffat put on leave after insider trading scandal
Senior IBM exec among those charged in Wall Street insider trading sting
October 15th, 2009
AMD posts third quarter loss, but moving in right direction
AMD reported a smaller-than-expected loss and said it saw growth in unit shipments for its microprocessors and graphics chips.
The company, which had a tough act to follow given Intel’s blowout third quarter, reported a net loss of $128 million, or 18 cents a share, on revenue of $1.4 billion for the quarter ended Sept. 30 (statement). The quarter was helped by a net gain of $54 million, or 8 cents a share, due to the repurchase of debt. AMD’s operating loss was $77 million. Wall Street was expecting a loss of 42 cents a share on revenue of $1.26 billion, according to Thomson Reuters.
As for the outlook, AMD said fourth quarter would be “up modestly.”
Simply put, AMD is moving in the right direction. Third quarter revenue was up 18 percent from the second quarter, but still down 22 percent from a year ago. Meanwhile, AMD said that its “product company,” the marketing and design arm, had non-GAAP net income of $2 million. AMD completed the spin-off of its manufacturing unit in March.
AMD said average selling prices improved as did shipments. In addition, AMD said that third quarter gross margins improved to 42 percent, up from 37 percent in the second quarter.
October 1st, 2009
Nvidia: Next big supercomputer player?
Nvidia unveiled its next-generation graphics processing unit (GPU) architecture, dubbed Fermi, and announced a key supercomputing win with the Oak Ridge National Laboratory.
The takeaway: Graphics and visualization are becoming key to scientific discoveries. And Nvidia could be a major player. Oak Ridge’s supercomputer will be used for research in energy and climate change and is expected to be 10 times more powerful than today’s fastest supercomputer (statement).
Fermi, announced at Nvidia’s GPU Technology developer’s conference (statement), is a new architecture designed to deliver computational GPUs. The game for Nvidia CEO Jen-Hsun Huang is to make his company more than just a graphics chip player.
Fermi will have tools for large data center deployments, 512 CUDA Cores and a host of other goodies including NVIDIA Parallel DataCache, which speeds up algorithims for physics solvers and raytracing.
September 21st, 2009
EC ramps up PR war with Intel (by publishing 518 page decision)
The European Commission has an answer to Intel’s contention that it made a bevy of errors in fining it $1.45 billion for anti-competitive behavior against rival AMD: It published all of its evidence.
The EC, the regulatory watchdog of the European Union (EU), published its entire ruling (statement, Techmeme, ZDNet UK). Intel obviously still has problems with the EC’s ruling, but the European regulators figured it was best to throw the decision to the public and let folks decide for themselves. The game: The EC wants to win in the court of public opinion too.
Among the key highlights:
- Intel rebates to Dell from December 2002 to 2005 were based on Dell buying Intel chips exclusively.
- HP had to buy 95 percent of its CPUs from Intel to get rebates from November 2002 to May 2005.
- NEC had to buy 80 percent of its CPUs from Intel if it wanted rebates between October 2002 and November 2005.
- And there’s a lot more deals in the EC’s filing that regulators argue Intel concealed.
ZDNet UK: EC reveals details of Intel antitrust breaches
But here’s the problem. There’s no way to make heads or tails of the EC’s filing. For starters, it’s massive. And if you scan a few pages you quickly get to a situation of “EC said, Intel said.”
What is clear is that the EC and Intel are taking their legal fight public in a big way. The key snippets revolve around Dell’s rebate deal with Intel. Intel argues that Dell’s documents show Intel exerted no pressure on the PC maker. The EC argues otherwise and released the following snippets (page 66 starts a bevy of footnotes about the Intel-Dell relationship):
Dell, which until September 2006 was an Intel-exclusive x86 CPU purchaser, explicitly pointed out to Intel how AMD was a growing threat to their own products: “AMD is a great threat to our business. Intel is increasingly uncompetitive to AMD which results in Dell being uncompetitive to [Dell competitors]. We have slower, hotter products that cost more across the board in the enterprise with no hope of closing the performance gap for 1-2 years”.
In an internal Dell e-mail of 26 February 2004, it is stated: “Boss, here’s an outline of the framework we discussed with Intel. (…) Intel is ready to send [Intel senior executive]/[Intel executive] /[Intel executive] to meet with [Dell Senior Executive]/[Dell Senior Executive]/[Dell Executive] . (…) Background: *[Intel senior executive]/[Intel senior executive] are prepared for [all-out war] if Dell joins the AMD exodus. We get ZERO MCP for at least one quarter while Intel ‘investigates the details’ (…) We’ll also have to bite and scratch to even hold 50%, including a commitment to NOT ship in Corporate. If we go in Opti, they cut it to <20% and use the added MCP to compete against us.”
Dell submitted to the Commission that “during the 2003-2005 time-frame”, the “MCP arrangement was not explicitly conditioned on exclusivity or minimum volume commitments. At the same time, it was negotiated against the historical backdrop of Dell products being based solely on Intel processors.” Dell has further specified that it “believed that, as Intel’s largest customer, it was able to
obtain a higher level of discounts than its competitors (although this could not be objectively verified).”
Those comments, which are really just an appetizer, either illustrate some mass conspiracy or a great deal for Dell since it distributed millions of Intel chips. The best move to handle this huge filing is to search the PDF based by PC vendor name—Acer, Lenovo, HP etc.—and read some juicy nuggets.
Happy reading.
September 15th, 2009
Intel: EC failed to meet 'standard of proof' for $1.45 billion fine
Intel said Europe’s top antitrust regulator failed “to meet the required standard of proof” when it fined the chip maker $1.45 billion for anti-competitive behavior against AMD. The news comes as Apple named Intel’s top lawyer Bruce Sewell as its general counsel.
Intel noted that it would appeal and the company recently laid out its case against the European Commission (EC). In a nutshell, Intel argues that the EC:
August 10th, 2009
EU ombudsman slaps antitrust regulators over Intel case
The European Union ombudsman reportedly criticized antitrust regulators over its evidence collection against Intel.
According to the Wall Street Journal, EU ombudsman P. Nikiforos Diamandouros said that the European Commission, which fined Intel $1.45 billion in May for monopoly abuse, failed to record evidence from a Dell executive in August 2006. The Dell exec told investigators that the company viewed the performance of AMD as very poor. AMD has stumped against Intel’s business practices.
Why is that important? The EC argued that Intel used its monopoly power to squeeze AMD. If Dell chose Intel for technical reasons the EC case may have looked different. The EC said that manufacturers bought Intel chips because they feared losing rebates.
The Journal characterizes the failure to record the discussion as an embarrassment that may shed light on how the EC operates. In any case, U.S. tech giants—notably Intel and Microsoft—are trying to highlight that lack of clarity with the EC’s decision making process.
Ultimately, the Dell conversation wasn’t going to sway the ultimate outcome. The Journal reviewed a yet-to-be-published report from the EU ombudsman. When published, the report is likely to land here.
July 22nd, 2009
Analysts: AMD has no answers for Intel's assault
Analysts on Wednesday panned AMD’s second quarter and said that Intel’s Atom chip for netbooks is squeezing its smaller rival. While netbooks may be a risk to Intel’s margins, one analyst made the case that Atom is a real killer to AMD. Simply put, AMD doesn’t have any answers for Intel.
AMD, which doesn’t play in the netbook space, is squeezed for two reasons, according to J.P. Morgan analyst Christopher Danely:
- The chipmaker doesn’t have an answer for Atom and that limits revenue growth;
- The presence of Atom in the chip market hurts pricing overall.
Add it up and it’s an ugly quarter for AMD. The company missed projections and gross margins were well below estimates as AMD sold down inventory. Like Intel, AMD said that the PC market has stabilized, but that outlook was overshadowed quickly. On a conference call, AMD chief Dirk Meyer tried to get analysts to focus on more than just the second quarter. Meyer wasn’t successful.
Danely sums it up:
AMD stated that it expects revenue to increase slightly quarter over quarter in 3Q09, significantly below normal seasonality of a 13% quarter over quarter increase. We believe AMD is losing share to Intel due to inferior products and is being hurt by lack of a netbook processor, which limits revenue growth and hurts pricing. We would note Intel processor sales outgrew AMD by 13% during 2Q09 and are expected to outgrow AMD by another 3% during 3Q09.
Goldman Sachs analyst James Covello said it’s possible that AMD will struggle no matter how much the PC market improves:
While fundamentals for both PCs and MPUs continue to improve as evidenced most recently by Intel’s solid report and guidance, AMD’s tepid top-line results/guidance and weak margins suggest continued execution issues and potential share loss. We expect the competitive dynamics in MPUs to remain challenging for AMD despite new product introductions, as Intel ramps Nehalem, Westmere, and CULV products in 2H’09/1H’10.
And then there’s JMP Securities Alex Gauna who was even more gloomy on AMD. Gauna said AMD’s financial results was “another disappointing quarter from the perennial CPU also-ran.” Gauna upgraded Intel based on AMD’s results.
However, Gauna’s research note foreshadows more problems for AMD. He said that Intel was just the known problem for AMD. Gauna added:
In addition to the crushing pressure Intel is able to exert against AMD with its process technology lead, AMD must contend with the rising interest in ARM-based computing solutions. If ARM technology is able to establish itself as a viable mobile computing solution beyond cell phones, and we believe it will, AMD’s benefit to OEMs as a second source to Intel will be greatly diminished. The result would be accelerated share losses in the 2011 timeframe, with servers likely to be the only viable product category for the company. We believe AMD’s Fusion strategy will ultimately fail due to more powerful NVIDIA GPU technology advances and more compelling Larrabee parallel computing offerings from Intel.
July 21st, 2009
AMD's second quarter margins squeezed
AMD continues to get squeezed by Intel. The company delivered second quarter earnings and a third quarter outlook that fell short of Wall Street targets.
The chipmaker, which had a tough Intel earnings act to follow, delivered a net loss of $330 million, or 49 cents a share, on revenue of $1.18 billion, down 13 percent from a year ago and flat from the first quarter. The rub: AMD’s net loss includes a 13 cents a share gain from the sale of inventory written down in the fourth quarter.
Excluding that gain, AMD lost 62 cents a share. Wall Street was expecting a loss of 46 cents a share excluding options expenses on revenue of $1.13 billion.
In a statement, AMD said that its second quarter gross margins were 37 percent including an 8 point gain from the inventory writedown. Wall Street was expecting gross margins of 38.24 percent.
Given that AMD’s margins are shrinking and Intel’s are expanding you can only conclude that there’s one vicious squeeze going on. As for the outlook AMD said:
Considering current macroeconomic conditions, limited visibility and historical seasonal patterns, AMD expects its Product Company revenue to be up slightly for the third quarter of 2009.
That outlook may be shy of the $1.21 billion expected by Wall Street.
AMD CEO Dirk Meyer said that the margin performance was disappointing, but “new platform, microprocessor and graphics introductions planned for the second half of 2009 position us well” for improvement.
July 12th, 2009
AMD fills out six-core Opteron lineup
AMD on Monday will fill out its six-core AMD Opteron lineup with high-performance and energy efficient versions of the chip. In addition, AMD said demand for its six-core Opterons have been better than expected.
AMD, which launched its six-core server chip in June, is targeting its SE and HE versions to datacenters that need more performance and lower power consumption, respectively.
Six-core AMD Opteron SE processors claim a 50 percent performance boost of the previous generation. The HE processors deliver 18 percent more performance per watt.
Gina Longoria, AMD’s senior product manager for servers and workstations, said “demand has been really good” for the six-core Opterons and “higher than expectations.” Longoria added that AMD has won a few large deployments and many Opteron quad-core customers are upgrading to the six-core versions.
She classified the six-core Opteron customers as a mix of existing and new ones.
With the HE version of the Opteron AMD is hoping to go after cloud computing and Web 2.0 deployments. Those data centers need the power efficiency in every rack of servers they have.
Here are some key charts in Longoria’s pitch:
The HE power consumption:
And the pricing:
Also see:
- Jason Perlow: AMD Istanbul: Field Upgrade Only If Your Hands are Nimble
- Gallery: AMD Istanbul Field Upgrade
June 1st, 2009
AMD rolls out six-core Opteron, aka 'Istanbul'
AMD on Monday introduced its six-core Opteron chip for servers, also known as Istanbul, and positioned it as a value play for data centers looking for an easy way to expand and power efficiency.
For AMD, the early launch of Istanbul is a positive development in its battle with Intel. AMD, however, is months behind Intel’s Dunnington chip, a six-core server processor that launched in September.
Jason Perlow: AMD Istanbul: Field Upgrade Only If Your Hands are Nimble
Gallery: AMD Istanbul Field Upgrade
Leslie Sobon, vice president of product marketing at AMD, gave her pitch in a Webcast. Her message: Istanbul is an easier upgrade since its based on a common platform with previous generations with more performance per watt. Sobon noted that AMD’s latest Opteron is available today. The AMD strategy revolves around value in a down economy.
AMD’s strategy (blog) is to talk about virtualization and power efficiency and offering those features across all of its processors. AMD called out Intel for rejiggering features based on the chip.
Here’s AMD’s money chart:
May 18th, 2009
EU's Intel ruling: Are there intangible benefits for AMD?
AMD has been broadcasting the EU’s $1.45 billion antitrust fine against Intel for nearly a week. AMD is touting the EU ruling almost a week after the antitrust commission hammered Intel.
As Brooke Crothers notes, AMD’s EU chatter borders on gloating. Check out AMD’s home page:
May 15th, 2009
Via gets helping server hand from Dell
Dell will reportedly use Via Technologies chips in select low power servers.
According to the New York Times’ Ashlee Vance Dell will unveil a system that has 12 full servers running on Via’s Nano chip. Each server will consumer 15 watts of power.
Dell will unveil the Via powered systems next week.
For Via, Dell would be a huge win. Via is a player in the netbook market, but Intel and AMD own the server market. Dell will pitch these servers to Web hosting companies. However, don’t expect much in the way of performance.
Vance writes:
Running at just 1.3GHz or 1.6GHz, the Via chips sit very low on the performance totem pole when it comes to server chips. But it’s the chip’s lower speed and other architecture tweaks helps it keep power consumption and costs low. For example, the new Dell servers cost less than $400 a pop, which is just a fraction of the cost of a typical server.
AMD and Intel are likely to scoff at such performance, but for Via Dell’s a big win that may lead to more customers.
For the first quarter, IDC reports that Via had a market share of 0.4 percent compared to Intel and AMD’s 77.3 percent and 22.3 percent, respectively. In the mobile market, Via had market share of 0.7 percent.
May 13th, 2009
AMD: Intel's Otellini 'doesn't get' his consumer disrespect, has 'no remorse'
After listening to Intel CEO Paul Otellini speak in a brief conference call this morning about the $1.45 billion fine Europe levied against the company this morning, AMD CMO Nigel Dessau has strong words for the chief executive of the world’s largest chip maker:
“I think he doesn’t get, or has no remorse about, what they’ve been doing: disrespecting the consumer,”
Dessau said.
Otellini says the EU decision is wrong. Meanwhile, AMD is pitching its side of the story.
In a passionate chat about the European Commission’s decision (Techmeme) to fine Intel after a nine-year investigation for “abusing” its “dominant position” in the market, Dessau emphasized the plight of the consumer — in Europe, Asia and America.
“The decision isn’t about AMD, it’s about consumers of Europe,” Dessau said. “The [EC] is saying monopolistic behavior harms consumers and should be stopped. We believe that if Intel complies, we’ll get a level playing field to compete.”
May 12th, 2009
AMD grabs back some market share from Intel
AMD has picked up market share on Intel in the first quarter as global PC semiconductor shipments fell 13 percent from a year ago, according to IDC.
The tug of war between AMD and Intel is notable given the nuances of the processor market. According to IDC data (Techmeme), Intel remains top dog with a unit market share of 77.3 percent, but that’s down 4.7 percent from a year ago. AMD’s market share in the first quarter was 22.3 percent, up 4.6 percent from a year ago.
For mobile PCs, Intel had an 84.3 percent market share with AMD finishing the first quarter with 15 percent. AMD’s mobile market share was up 4.7 percent with Intel down an equal amount.
Among server/workstation chips, Intel had 89.3 percent of the market in the first quarter, up 1.2 percent from a year ago. AMD’s market share was 10.7 percent, down 1.2 percent. For desktop PCs, Intel’s market share was 70 percent, down 3.9 percent, with AMD’s share at 29.8 percent, up 3.8 percent.
My takeaways:
- AMD’s value for price pitch is working well in the mobile and desktop markets in a down economy.
- In the server market, Intel has defended its turf well by ratcheting up performance.
- Intel shipments of Atom processors for netbooks fell 33 percent in the first quarter as OEMs carried too much inventory. Reading into that stat you could surmise that AMD’s share gains may have been due to Intel’s inventory correction.
IDC predicts that the bottom in set for the processor market.
April 24th, 2009
Tech execs new hobby: Calling IT spending bottoms
Technology executives have a new hobby: Calling IT spending bottoms. However, some refuse to play along.
Intel kicked off the bottom calling fiesta last week. Intel CEO Paul Otellini said “we believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns.”
And then on Thursday EMC joined the parade. EMC CEO Joe Tucci said on the company’s earnings conference call:
As I look to the balance of 2009 I do believe we are at or very near the bottom from an IT spending point of view. I continue to believe that the second half of the year will show an improvement with Q4 holding the most promise but, I do believe that Q2 will continue to be sluggish. A little more predictable but sluggish.
Why sluggish? I believe that customers will continue with their just enough, just in time IT spending patterns. They too are looking for signs of improvement and while there is some light at the end of the tunnel they will likely wait a bit and continue to be cautious.
Is it just me or is everyone trying to call the turn? The reality: None of these guys can predict out more than a few months. There appears to be some thaw in spending but no one knows how long it will stick.
Enter the anti-bottom callers. Microsoft CFO Chris Liddell said the company sees a slow and gradual recovery, but weak spending could persist through 2009. Simply put, it’s too soon to call a bottom, said Liddell.
Indeed, it’s so early that Microsoft isn’t providing earnings or revenue guidance even though its business is one of the more predictable operations around.
AMD CEO Dirk Meyer summed up the view of the anti-bottom callers:
You know, I’ve heard some say that we’ve hit bottom. I don’t know how anybody could say that we’ve hit bottom given the continued uncertainty that we have in the macroeconomic climate. And as a result of that I would say we’re simply being cautious in our outlook.
AMD’s outlook for the second quarter is somewhere between up 10 percent and down 10 percent. In other words AMD’s guess on PC demand is as good as anyone’s. Meyer gets the quote of the week nod:
You can see – you can drive trucks through some of those numbers, whether it’s a positive 10 or a minus 10. So it’s hard to figure out in a normal pattern what’s with average, what happens in second quarter. And then you add into it the current economic environment and it really becomes a little bit foggy.
Maybe the bottom is in. Maybe it’s not. In any case, Meyer probably has the most accurate take for now.
April 23rd, 2009
Are netbooks really junky?
Tim Cook, Apple’s chief operating officer, stirred up a little firestorm in the PC industry by calling netbooks—essentially the only growth area—”junky” and pointing out a bevy of flaws with them as constructed.
Cook’s comments, which came following Apple’s stellar second quarter financial results (Techmeme), are notable for a few reasons:
- Apple was being on point about netbooks;
- Signaled that it had no intention of playing in the netbook market—yet;
- And isn’t going to sacrifice margins.
But the larger question is whether netbooks as currently constructed are junk. I have a Dell Mini 9 and the little bugger works just fine—as long as its hooked up to a keyboard and monitor. It’s just too cramped, but the Ubuntu works well.
Here’s what Cook said when asked for his thoughts about the netbook category on Apple’s earnings call:
For us, it’s about doing great products. And when I look at what is being sold in the netbook space today, I see cramped keyboards, terrible software, junky hardware, very small screens, and just not a consumer experience, and not something that we would put the Mac brand on quite frankly. And so, it’s not a space as it exists today that we are interested in, nor do we believe that customers in the long term would be interested in. It’s a segment we would choose not to play in.
That said, we do look at the space and are interested to see our customers’ respond to it. People that want a small computer so to speak that does browsing and e-mail, might want to buy an iPod Touch or they might want to buy an iPhone. And so, we have other products to accomplish some of what people are buying netbooks for and so, in that particular way we play in an indirect basis.
Loading ...The comments were notable on a few fronts.
First, Cook is somewhat speaking the truth. Excluding the swipe about the software—Windows XP and Ubuntu seem capable—he largely on target about netbooks. Cook’s comments about the iPod touch or iPhone being a netbook is only partially true. The comparison is a bit thin.
So why would Cook take a jab at the netbook?
It sends a few signals.
1. Apple isn’t going to blow its margins and a junk netbook could diminish its brand.
Would you screw with these margins for netbook glory?
The larger question is whether the netbook space is really worth the effort. AMD has punted on netbooks for now and will focus on the light, thin notebook market. Intel will be answering AMD and potentially at least limiting the profit margin damage that’s possible from Atom.
2. Apple doesn’t have a direct netbook answer yet.
Piper Jaffray analyst Gene Munster noted that Apple projected third quarter gross margins of about 30 percent, which is lower than the 36.4 percent reported in the second quarter. Does that hint at a netbook-ish device? Probably not. Munster writes:
While some investors believe this decline in GM may be due to a low-cost portable in the Sept. quarter, we do not believe this is the case. In other words, we do not expect Apple to introduce a low-cost portable in the Sep-09 quarter; our contacts in the Asian supply chain have not suggested such a product is on track for launch before Sep-09. Rather, we believe Apple is simply reiterating its previous comments instead of issuing revised expectations for the Sept. quarter.
3. The iPod touch may be seen as a netbook.
JP Morgan analyst Mark Moskowitz argues that the iPod touch is already a netbook. He writes:
It is no secret that unit trends in PCs are currently being helped by netbooks. We think that customers are attracted to the form factor for portability, email, and the Internet. While Apple has yet to introduce a netbook, the iPod touch is similar in function, and its sales momentum seems to be mirroring the netbook unit sales trend lines in the broader market.
4. The netbook form factor just isn’t there yet.
Netbooks seem to small, but thin, light notebooks don’t seem to be much of an advancement. There’s something in between and Apple is most likely mulling over what that device should be. The Sony-VAIO P-Series may be a good start.
April 21st, 2009
AMD: Tough first quarter; Ready for Intel encroachment for thin, light notebooks
Advanced Micro Devices reported a first quarter net loss of $416 million, or 66 cents a share, on revenue of $1.17 billion, down 21 percent from a year ago. However, CEO Dirk Meyer said Tuesday that AMD is “more nimble” following the spin-off of its manufacturing assets, but the company projects revenue to slide in the seasonally slow second quarter.
Even though AMD’s quarter was tough it still managed to beat Wall Street’s low expectations. The company’s net loss (statement) included a charge of 4 cents a share. Excluding that charge, AMD topped estimates by 4 cents. The first quarter for AMD was about burning off inventory that was built for demand that never arrived.
The company has consolidated GlobalFoundries, the manufacturing joint venture, in its results but referred to AMD “the product company” as the chip design outfit. AMD’s chip design and product business had a net loss of $189 million.
Like its much larger rival Intel, AMD forecasted some balance in supply and demand. “The severe inventory corrections of the last quarter have stabilized,” said Meyer on a conference call with analysts. Meyer stopped short of calling the bottom like Intel has, adding that “I don’t know how anyone can do that.”
Meyer said customers are only buying the processing power they need. Notice AMD’s plan: It is pitching itself as a value chip maker and hinting that Intel gives you more processor than you need. He touted AMD’s Yukon and Congo platforms, which target light notebooks.
CFO Bob Rivet added that AMD saw some demand in the first quarter from value buyers. Nevertheless, Rivet said that second quarter revenue will decline from the first quarter for AMD. AMD hopes to be cash flow positive in the second half of the year.
However, AMD is still going to have a tough time. Meyer was asked about Intel’s launch of chips for the light, thin notebook market. Meyer said AMD wasn’t planning to cede market share, but noted the second quarter was “murky at best.” Meyer said that Intel’s CLUV move was in response to AMD’s move.
Here’s a look at how AMD’s first quarter stacked up:
April 17th, 2009
Intel preps chips for thin, light notebooks; Is it roping off Atom?
Intel CEO Paul Otellini earlier this week highlighted the chip giant’s plan to move upstream from its Atom netbook chips to focus on “consumer ultra low voltage products” to power thin and light notebooks.
For Intel, Otellini’s detour into product foreshadowing was a change of pace on the company’s earnings call. Intel this week delivered better than expected first quarter earnings and called a bottom in PC demand—an assertion that’s already being questioned.
Here’s Intel’s conundrum: Netbooks are the hottest selling PCs. The good news is that Atom chips power those devices. The bad news is Atoms carry lower profit margins. Intel’s average selling prices remained flat for the first quarter, but execs said that Atom demand dropped off in the first quarter from fourth quarter. In a nutshell, netbook makers were well stocked with Atom chips and didn’t need to replenish inventory.
If Intel isn’t careful, Atom could come to dominate its product mix. The solution move upstream with chips for light notebooks. What’s notable is that Intel is moving upstream to territory AMD has staked out. AMD decided to target the light notebook market and forgo the netbook craze for now.
Here’s what Otellini foreshadowed (transcript):
We do think, and we’ve been saying this for about a quarter now, that the big trend in notebooks this year, starting midyear, is likely to be very well designed thin and light notebooks, using the CULV, or ultra low voltage products. And I think you will see those at very attractive price points. Up to this point in time, those machines have been sort of executive jewelry. And I think they will hit mainstream consumer price points, and we are expecting that to be, that in itself will be a more clear distinguishing set of characteristics between netbooks and notebooks.
We also look forward to the launch of our new consumer ultra low voltage products which will enable many new thing and light notebooks at very compelling price points.
The message: There’s more to life than netbooks. And there’s more money in going upstream a bit. Intel CULV chips will go against AMD’s lineup for mini-notebooks—a market carved out in November.
So what’s going on here? A few analysts believe Intel is trying to rope off its own hit—Atom.
Wedbush analyst Patrick Wang writes in a research note:
We are encouraged by Intel’s focus on low-cost ultra portables with the introduction of additional consumer ultra low-voltage (CULV) processors in 2Q as they (1) help contain potential margin dilution from Atom’s ascent in the product stack and (2) address a product gap that AMD is targeting with Neo. We think low-cost ultra portable notebooks become increasingly more important as consumers look for a happy medium between the compelling form factors of a netbook and the performance of mainstream notebooks. We expect Intel to launch several CULV-class processors on April 20 and further expand its product line as we approach Computex in June.
We believe Intel is looking to further segment the notebook market by introducing consumer ultra-low voltage (CULV) class chips targeting the low-cost ultra portable notebook market (think about a sub-$1000 MacBook Air). CULV platforms are expected to provide laptop-like performance, richer multi-media capabilities, 6+ hours of battery life, and a full keyboard with the intention of providing the perfect compromise between price, size, and performance.
There’s no question that there’s a nice market for lightweight notebooks. Who wouldn’t want a sub-$1,000 MacBook Air?
Wang reckons that Intel’s real game is making sure Atom doesn’t eat into higher-end laptop chips. However, AMD’s plans for targeting the niche above the Atom seems to hit a nerve at Intel.
Wang also adds:
Intel’s CULV-class chips will come in three flavors, 65nm Celeron, 45nm Core 2 Solo, and 45nm Core 2 Duo. In particular, a few processors were made available to OEMs over the last few weeks including the SU3500 (1.4GHz, 1C) and SU9600 (1.6GHz, 2C). Notably, these processors carry a TDP of 5.5W and 10W, respectively, and compare favorably against standard 35.0W parts. On top of the lower voltages, these chips use a miniaturized packaging technology, resulting in smaller packages and thinner profiles – similar to the MPU used in the MacBook Air.
How will this play out? In a nutshell we get another Intel vs. AMD dogfight in the thin, light notebook market. However, Intel may have some trouble achieving its dual goal of containing Atom’s margin killing march and thwarting AMD.
Why? Look at the latest PC market stats from IDC.
HP has surged ahead. That’s important because HP is the most supportive of AMD’s platform.
JMP Securities analyst Alex Gauna says in a research note:
Although we believe Intel gained share in the first quarter, apparent share gains by HP could ultimately benefit AMD given HP’s historic tendency to support and endorse AMD platforms to a larger extent than other leading OEMs. With AMD as a fallback option, HP is in a better position than other OEMs to keep pricing pressure up on Intel.
And then there’s the surge of netbook powerhouse Acer. Gauna notes:
Acer, a leader in pioneering lower cost netbook platforms, is also among the share gainers, with the best top five year-over-year unit growth of 6.8% to reach 11.6% share versus 10.1% a year ago. To our knowledge, Acer tends to drive lower priced SKUs that are a detriment to Intel ASP mix.
Add it up and it only makes sense for Intel to target the thin and light notebook market. It has to cordon off Atom’s rise.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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