Home / Channel / AMD financials predict Q3 drop while Intel targets increase

AMD financials predict Q3 drop while Intel targets increase

Following AMD's early heads-up to the market that it could miss its stated target for 2012, it comes as little surprise that today's numbers are not strong. So what next for AMD and how should it react?  KitGuru leans against a Wall in the Street and ponders whether money ever sleeps.

Even when AMD was banging in record increases in revenue, it has always found it much harder to actually deliver an actual, sustainable profit.

It also appears to suffer from the same kind of issue that affected ATi when it was a separate holding: Because the company is managed within extremely tight parameters, there are almost no situations where the share value plummets or sky rockets so – as a result – there are very few times when the market can make a killing.

For the sake of comparison, if you look at nVidia in recent history, its shares have climbed to to around $38 and down to almost $6. In both directions, traders can make money. In recent times, AMD has peaked around $10 and today has dropped to just over 4$. Much less exciting for traders.

So what about AMD's style in dealing with the outside world? Speaking your truth quietly and clearly – hoping to be heard above the gaggle of the 24-hour news cycle is optimistic. Much better to have charismatic/talismanic leadership – prepared to get into the field and communicate with press and public – channel and MNCs.

We all know that a leopard struggles to change its spots, but AMD might need to apply some ‘go faster stripes' and get out there.

So what else can be improved?  Well, engineering teams take years to deliver products and, even then, they are at the mercy of the company's chosen FAB. Get product to market quicker and you might have something, but can AMD force a change here?  The CPU teams have been on the receiving end of Intel's Tick-Tock and, in all honestly, need to ‘do something' to stem the tide of Core proliferation.

Two years ago, KitGuru asked the question, “Can AMD sack its way to success?“. We concluded that getting rid of a layer of middle management would certainly help AMD's financials, but that the company really needs to innovate its way out of its present situation.

Cost cutting offers one way to change AMD's situation, but it can only take you so far. Unless AMD wants to move to a new model where it simply creates periodic price lists for Dell/HP etc (getting rid of everyone who is presently working with the words ‘Channel', ‘Sales' or ‘Marketing' in their job title) – then the chip giant needs to try something else.

The only solution left is to take a HUGE step back, reconsider what you are making Vs what the market actually wants to buy – and then PUSH on the sales side. Sell what you have and do it quick. Get the revenue streams rolling and re-invest wisely.

Along the way, you would need to re-energise your channels and make people believe that AMD can provide and overall winning solution, from powerful rigs with overclocked FX-8120 chips, down to the much bigger end of the market with its focus on affordability – somewhere AMD's updated APUs should make a difference (assuming customers have been educated as to what they are being offered).

In the graphics arena, Sapphire has recently shown the way with the launch of its 6GB Radeon HD 7970 Toxic product. Everyone involved in KitGuru Labs was expecting a ‘close, but no cigar' result in the new card's battle with the KFA2 GTX680 – but Sapphire pulled off a miracle and managed to win in 7 out of 12 benchmarks.

Not sure if ‘Sapphire fighting spirit‘ is available in syringe format, but it would provide a welcome boost down in Austin if it was.

It's all well and good to talk in generalities, but what can AMD do specifically?

Well, you can't price the FX processors into the same space as Core i7 chips and expect to get away with it. That's NOT where the mass market is and its not where AMD has a win. AMD needs to get its product stack right – to make sure it has the right match ups – ones that it can win. With that in place, it then needs a marketing drive like there's no tomorrow over the next 24 months – with genuine results needed inside 6 months. Looking at global channel prices, there's no reason why an overclocked FX processor cannot be matched up with a run-of-the-mill Core i3. That alone would create a definite win for AMD and offer customers real choice in a large market.

In turn, that would not only breed confidence into the market, but also where it is needed much more – inside AMD itself.

Retaking the global graphics crown should be something to sing about, but there was no obvious announcement on AMD's home page when it happened. Do people really think of their PC as a hobby? Are people with hobbies out skateboarding? Strange stuff.

“We are taking definitive steps to improve our performance and correct the issues within our control as we expect headwinds will continue in the third quarter as the industry sets a new baseline,” said Rory Read, AMD president and chief executive in a statement. But could AMD avoid a drop in Q3 revenues? What would it need to do for that to happen? Tough challenges need swift/affirmative decisions – and the time is now.

KitGuru says: Being without a Chief Sales Officer has obviously had an effect – not least of which has been on the strategy that AMD needs to adopt. When you have something like 5 (sales) captains in 5 years, then any company would struggle to define, implement and enforce a complete strategy. Fingers crossed that AMD makes a positive announcement in this area soon because, right now, Intel is complaining that the PC market only grew 3% while AMD are focused on revenues shrinking from $1.57Bn to just $1.41Bn.

Comment below or in the KitGuru forums.

Become a Patron!

Check Also

Biostar launches its first Arc A-series graphics cards

Biostar has been known to be working on Intel Arc graphics cards for almost a …