"One called him a nobody.
No, I said, he was a failure.
You can't remember
a nobody's name, that's why
they're called nobodies.
Failures are unforgettable."
-- From "Failure," by Philip Schultz
Advanced Micro Devices
The bad
Management had expected to see a normal seasonal drop from the fourth quarter, to the tune of about 7% below the $1.77 billion produced in the last reporting period. But because of "lower than expected sales across all business segments," it's a 15% slide instead, to about $1.5 billion.
The announcement was made with a classic Michael Caine deadpan delivery. There were no explanations, excuses, spin attempts, or hand-waving to distract from that one gloomy fact. The only other tidbit in there was a 10% payroll reduction plan, starkly presented. No ifs, ands, buts, or whys. Heads are rolling in the next two quarters, and we don't know where the reductions are hitting the hardest.
If AMD hopes to keep up with Intel
Some would argue that the chip giant is about to push AMD over the edge to stand alone at the top, and that the smaller rival must therefore simply fight for survival rather than for some uncertain future success. That is, of course, total baloney.
The ugly
If Intel really wanted to kill AMD, it could easily have afforded to keep the price wars of the past two years going quite a bit longer, with even more aggressive pricing moves. But it didn't do that. The war is over. That's because Intel needs AMD or some other smaller competitor, for a couple of reasons.
AMD is the Apple
The good
That's why AMD's management is not crazy for taking its financial situation to the brink of bankruptcy, as it did last year. That risky move may have been the warning flag that told Intel to back off the price pressure at last and let its smaller competitor breathe for a while. AMD might flail around a bit under heavy pressure, but it's unlikely to go under completely.
Right now, AMD's stock is about as depressed as it will ever be, and a slew of impressive products is just now hitting sales channels. We'll hear more about that in next week's earnings announcement. I'm not saying that it's a risk-free investment -- nothing ever is -- but I'd be shocked to see anyone buying AMD stock today and not making money over the next six months.
Failures are painful but fleeting, but AMD will never be a nobody. You can take that to the bank.
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