AMD execs discuss strategy, 45nm chips, return to profitability

Shortly after AMD's first-quarter financial results became public yesterday afternoon, AMD executives held a conference call to talk a little bit about their plans for a return to profitability. While they're understandably disappointed with the results, they see a silver lining in the fact that customer response to new products like B3 Opterons, triple-core Phenoms, and Radeon HD 3000-series graphics cards has been positive. According to AMD CFO Robert J. Rivet, AMD's refreshed product portfolio should "pay solid dividends as the year progresses."

How does AMD plan to climb out of the ditch, though? To be clear, AMD CEO Hector Ruiz reiterated that current plans are still for AMD to return to profitability in the third quarter of this year. The recently announced 10% workforce reduction, as well as ensuing restructuring moves, should help make those plans a reality, and Ruiz also mentioned that AMD could close down unprofitable businesses in areas outside of its core operations:

We need to intensely scrutinize all of our businesses in order to ensure that our core x86 and graphics products are on a healthy path to leadership and profitability. We also need to intensely scrutinize our non-core businesses and revisit their strategic fit into our plans and their path to growth and profitability. Absent these, we will exit those businesses.

One thing Ruiz still wasn't willing to get into was AMD's future "asset-smart" strategy. However, he provided some hints of what AMD has planned. First, he announced that the company has made "significant progress" in elaborating strategy and added, "I'm very hopeful that we will be able to communicate details of this rather complex effort in the near future. At that time, we believe we will also have an opportunity to further restructure the company for increased focus and added flexibility." When asked in the Q&A session whether AMD needed to own its fabs in order to succeed, Ruiz went on to say:

First of all, I don't think the ownership of the capacity is necessarily a reflection of the leadership in technology needed there. Our partnership with IBM has demonstrated that we're able to hang in there relative to technology without having to own the R&D, for example, totally—we're sharing it. So, I'm a strong believer that—especially for us, we've demonstrated in the past, we'll demonstrate that going forward—that partnering with people is very important to our future, and particularly in the area of technology.

While not as clear as they could be, those statements seem to corroborate recent speculation that AMD might end up spinning off its chip fabrication business into another company.

Aside from broad strategic moves, AMD executives also shared a few details about upcoming products. Robert Rivet said AMD is on track to kick off 45nm production "at mature yields" in the summer, and AMD COO Dirk Meyer added that volume 45nm product shipments are scheduled for the fourth quarter of this year. There was also mention of Bulldozer, AMD's next-generation architecture, which is now scheduled to sample in 2009 using a 45nm process.

Looking ahead to the current quarter, Rivet expects "another challenging quarter," with Q2 revenue to decrease "in line with seasonality." He added that AMD is taking major steps to cut costs and restructure itself as quickly as possible, though, so Q2 net losses might not be as spectacular as they've been for the past six quarters.

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