AMD’s New Chip Can’t Save it
September 10, 2007 by Douglas A. McIntyreAMD (AMD) launches it new Barcelona quad-core chip today. With four processors in one, it offers server and PC manufacturers a new level of computing power at a relatively low price. The problem is that Intel (INTC) has already launched a similar product of its own.
Intel has been so successful at taking back market share from AMD over the last 18 months that shares in the smaller company have fallen from $42 in January 2006 to $13. When AMD bought graphics chip company ATI, it took on boat loads of debt, leading to concerns that it cannot meet its obligations on the interest. AMD’s two most senior sales executives recently left the company and CEO Hector Ruiz appears to have no idea how to get the company out of its predicament
According to the company’s 10-Q, it lost $600 million last quarter on revenue of $1.378 billion. Pricing pressures have caused its gross margins to collapse. The balance sheet shows long-term debt of over $5.3 billion.
If Intel had not launched a competing product, Barcelona might have a chance to pick up market share from its larger competitor.
But, if wishes were horses, all the beggars would ride.
Douglas A. McIntyre
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