AMD to stockholders: Everything will be all right

During its annual shareholder meeting in Austin, Texas this morning, AMD CEO Hector Ruiz attempted to reassure shareholders that his company is on the right track. Ruiz opened by stressing how disappointed he is with last year’s financial results, but he quickly went on to paint a more optimistic picture of AMD’s future:

In looking back, 2007 was a difficult year of transition for AMD. And I speak for every AMD employee when I say that I could not be more disappointed with our financial results. The Barcelona processor delay really hurt. But that is behind us. As a matter of fact, we’ve learned some lessons very important to us. In our materially cyclical industry, we have learned to anticipate and prepare for the inevitable downturn. And that’s exactly what we did. We have a healthy cash balance sheet approaching $2 billion, and we have some financial cushioning in place if the macro-economic environment continues to disappoint, particularly in North America.

Ruiz reiterated that AMD is on track to become operationally profitable again in the second half of the year, and he called 2008 "a year of opportunity." He also explained that the company is taking steps to avoid a repeat of the past few quarters:

While our short-term goal is to achieve operational profitability in the second half of this year, our long-term goal is to achieve consistent profitability in good times and bad times. To that end, we are re-architecting the business so that our financial success is not invariably dependent on continuous component performance and leadership.

In order to keep AMD’s head above the water, Ruiz said, "[we will be] reducing our break-even point by several hundred million dollars so that we will be profitable on our current revenue stream." In other words, if the previously announced job cuts and restructuring work out, AMD may not need to double its market share to be profitable again.

Speaking of restructuring, Ruiz also had a little more to say about AMD’s long-awaited "asset smart" strategy. As part of the strategy, Ruiz said, AMD will "deploy [its] manufacturing assets to most cost-effectively stay at the leading edge and deliver customer value." While vague, the statement further hints that AMD might spin off its manufacturing business as a separate entity.

Did Ruiz’s promises successfully convince stockholders? That’s hard to say: the only question after his monologue came from an elderly Austin resident, who talked for several minutes in a slow, baritone drawl about golf tournaments.

Comments closed
    • PRIME1
    • 13 years ago

    ATI is the iceberg, AMD is the Titanic and Hector is the ambitious captain trying to get to New York in record time.

    What could go wrong…….

      • 0g1
      • 13 years ago

      I think Intel and nVidia are the icebergs ;).

        • PRIME1
        • 13 years ago

        Intel and NVIDIA are the rescue ships that will pick up the survivors.

    • green
    • 13 years ago

    basically ruiz is re-assuring the board amd will make a profit in h2
    just in time for him to leave late q4 with a performance bonus
    that’d be my guess anyway

    if he’s looking to get amd profitable he should lead by example
    like say taking a 75% cut off of his salary
    that’d be 750k per year that amd saves

    also seems like shanghai won’t be competitive against nehalem
    basing this on moving away from l[

      • 0g1
      • 13 years ago

      Hey, for all we know, Nehalem could be slower per clock (and per core) than Penryn.

    • 0g1
    • 13 years ago

    “To that end, we are re-architecting the business so that our financial success is not invariably dependent on continuous component performance and leadership.”
    Pfff, not exactly news. Wow, what a great CEO. He doesn’t care if the company’s products aren’t constantly dependant on performance leadership. Wow, that’ll really send a good message to the workers.

    *Sigh* … what a disappointment.

    • Phr3dly
    • 13 years ago

    AMD has negative cash flow.

    If they blew their $2B on R&D, they’d go out of business tomorrow. Unless they got another loan or investment, which would give them more cash. Which is what they did. Which is why they have $2B in cash.

    • maxxcool
    • 13 years ago

    In other news, AMD branded koolaid hit the streets with a bang, after a few sips beverage consumers were filled with a eerie sense of calm as they flung themselves off the nearest cliff.

      • NeXus^
      • 13 years ago

      Hahaha! That made me laugh maxxcool, thanks 🙂 BTW I am pro AMD, but I had to laugh at that funny comment!

    • ssidbroadcast
    • 13 years ago

    So Hector just played Bob Marley during the conference?

      • Valhalla926
      • 13 years ago

      At least I’m not the only one that caught that.

      • MadManOriginal
      • 13 years ago

      That was my first thought upon reading the headline too.

      The next one should be ‘No Intel, no cry.’

        • ssidbroadcast
        • 13 years ago

        q[

    • spartus4
    • 13 years ago

    What a load of horse @#$%. To use the economic downturn as a reason is Hector saying we don’t want to admit that we are messed up. I quote: “…we have learned to anticipate and prepare for the inevitable downturn…we have some financial cushioning in place if the macro-economic environment continues to disappoint, particularly in North America.” Intel doesn’t seem to be having a problem in North America with the downturn.

    If your product sucks so does your balance sheet.

      • Anonymous Coward
      • 13 years ago

      You know, he also said: “The Barcelona processor delay really hurt.”

      • flip-mode
      • 13 years ago

      AMD is much more vulnerable to the current economic downturn than Intel is. A higher percentage of AMD’s sales are to consumers than are Intel’s, and while businesses continue to need computers and are savvy enough or performance hungry enough to choose Intel over AMD, for consumers computers are mostly luxury items. Consumers are now spending their money on gas or just plain saving it due to uncertainty.

    • Saber Cherry
    • 13 years ago

    Hector Ruiz is to AMD as Bush is to USA, only more so. If he isn’t removed soon the company will have no future.

      • ludi
      • 13 years ago

      SaberCherry is to TechReport…

      Oh wait, that doesn’t make sense as an SAT question, either.

      I mean, if you have some burdening need to shoot at politicians, you could try the Burmese Junta, which is refusing foreign aid while potentially 60,000 people are dead or dying from a typhoon. Seriously.

        • wingless
        • 13 years ago

        I don’t like Bush all that much either, but Ludi is right. There are a lot of other idiots in the world causing a lot more turmoil in their countries than Bush could ever hope for. If you want to get onto this website to bash MY country then please let us know what country you are from. IF and only if you are from the United States can you bash it or our present leader. Also, DONT DO IT HERE!

          • Saber Cherry
          • 13 years ago

          My apologies, I should not have brought up politics. But bashing a politician is not the same as bashing a country.

            • CB5000
            • 13 years ago

            I am USA resident and Saber Cherry is right. Bashing a stupid politician who has detached himself from the rest of the country is not the same as bashing the country. IMO the USA IS the BEST country in the world but our president is just an egocentric maniac living to please his special interest groups…. Sadly our democratic and republican candidates leave A LOT to be desired for… When Washington casually ignores the needs of the citizens of the united states things go bad and as a capitalist nation, we are starting to lag behind. Problem is that the corporate taxes are too high and the individual taxes especially for the top 5% wealthiest people in the country is too low.

            The problem with AMD in a way is similar to what’s going on in Washington. Too many middle management morons that can’t handle responsibility and figure out what’s going on. There is a general sense of apathy in the politics of the country and within AMD. The leadership of Mr Ruiz is too weak and his vision, and direction isn’t very clear…nor is it well thought out. AMD should have attacked Intel’s anti-competitive practices a long long long time ago but either they are too lazy or hopeful that Intel will leave some of the pie for AMD. Complete and unadulterated “free-trade” lends to a very powerful company, and Intel didn’t hold back and punches in that respect. AMD on the other hand… lacks conviction and commitment to the bussiness.

            • ludi
            • 13 years ago

            *thump*

            Ow, your knee!

          • asdsa
          • 13 years ago

          [deleted]

          • alex666
          • 13 years ago

          I’ll do it here, and now. I’m a proud American, and President George Bush is an idiot who has brought down our country big time.

        • Saber Cherry
        • 13 years ago

        Yeah, it makes Katrina look like child’s play. Oh, wait… then there’s the fact that Katrina took place in a modern country with the ability, money, and infrastructure to prevent the catastrophe (levees bursting and unevacuated people) and aftermath, given decent leadership, while Burma is a 3rd-world country with no money or infrastructure to speak of. Burma’s leadership may be evil and incompetent, but the results of the ‘cyclone’ up to this point would probably not have been substantially different with a democratically elected government.

        If there’s a cholera epidemic soon, that will be the government’s fault for not promptly accepting foreign aid, because they’re suspicious, selfish, and vile, like most 3rd-world military governments. But the 100k or so already dead would have died either way.

        At any rate, I’m not sure what it has to do with Bush or AMD.

          • ludi
          • 13 years ago

          Katrina death toll was ‘only’ about 3k and most of the decisions that lead to those persons dying were made by corrupt local politicos, something that has been a problem in Lousiana for decades. And in the aftermath, said politicos weren’t rejecting assistance from the federal government and surrounding states in order to solidify their power base; quite the opposite, they were complaining that someone else hadn’t bothered to relieve them of the responsibilities they had towards their electorate a long time in advance.

          As such, I have no idea what you are talking about. If the idea was that Ruiz is bad for present-day AMD, we can agree to that, but that’s no reason for anyone’s knee to dent their desk on some totally unrelated topic. Lots of valuable coffee and Mountain Dew gets spilled that way.

          • CB5000
          • 13 years ago

          Katrina is Bush’s responsibility… If he didn’t appoint his business friend, Micheal Brown, who was a head of the Arabian horse association (Which obviously does not lead to good disaster management experience), FEMA wouldn’t have been in that much dismay. If only Bush appointed someone with a long history of dealing with disasters and managing them rather than his friend… the Katrina disaster would have been way better… and way less people dead. It’s not Micheal Brown’s fault… he was just appointed a position and thought that he could make easy money… It’s the same with 9/11 really… Bush’s desire to surround him self with his “friends” compromised the integrity of the national security and disrupted the operations of the CIA and NSA. Bush chose his petty personal friendships over the lives of the citizens of the united states. It is really… Unforgivable.

          We as the citizens of the united states need to take responability too… we are just too happy to take washington’s bullshit up our arse while they screw us over and over again. This is a demoratic nation and our voice is being squelched….

            • titan
            • 13 years ago

            I didn’t know any man could pass wind fast enough to cause a hurricane. Lol!

            Katrina is not President Bush’s fault.

            A lot of people who were “stranded” actually decided to stay. The rescue workers were being shot at because the workers picked up someone else first instead of the one holding the gun.

            Additionally, we are not a democratic nation. We’re a republic.

            • CB5000
            • 13 years ago

            Most of the people who “decided” to stay were mostly just stranded there because they didn’t have the means to evacuate the city. IE. they were too poor to have a car or even enough money for gasoline to get out of the city.

            And we try to pass off as a democratic nation

            • ludi
            • 13 years ago

            Stop. Really, just stop.

            Mississippi took just as hard a hit as Louisiana, yet they managed to get the mess on their side cleaned up and restore normalcy in about as good of time as could be expected, considering the magnitude of the event. Ditto for Florida following Hurricane Andrew. Lousiana’s debacle was because Louisiana has been badly run by corrupt politicians for decades.

            FEMA is not, and was not designed to be, a first responder. Regardless of whatever mistakes were made in FEMA, they are irrelevant to what happened in the first 24 hours of and after the storm, and in the intervening time since then.

          • Anonymous Coward
          • 13 years ago

          The BBC was claiming that India claimed to have told the Burmese government about the storm, yet the average people on the street had no idea. I think a reasonable democracy would have at least gotten people to evacuate. These storms don’t appear suddenly…

            • d2brothe
            • 13 years ago

            Yea, they saw Katrina coming too….just my 0.02

            • Saber Cherry
            • 13 years ago

            A reasonable government certainly would have TRIED, unlike the military rulers. However, Burma has very few televisions and telephones, especially in the small villages which may not have either, and electricity is not exactly commonplace. Furthermore, even if notification had gotten out… maybe some fishermen would have stayed home that day, but the country was not capable of mass evacuations. And the UN / Red Cross can’t whip up 2 million tents and rations and distribute them throughout a country with no road infrastructure or modern airports in 24 hours to house evacuees, either.

            Again, the aftermath is a different matter – that’s where the government should have been doing a much better job – but the initial devastation was pretty much unavoidable.

            • BobbinThreadbare
            • 13 years ago

            Hell, even Cuba can evacuate their people before a storm comes. In fact they force their people to evacuate, whether they want to or not. They just send in the army,

            • Saber Cherry
            • 13 years ago

            Cuba is narrower and much more modern than Burma (as strange as that sounds). Even so, I don’t think it would fare too well against a hurricane as devastating as the thing that smacked Burma. I’m not really sure, but I think Cuba rises out of the ocean faster also (i.e., is steeper) – it’s the very low-lying countries that have built up cities and towns on their coastal wetlands that can get devastated by storm surge. Like New Orleans, Miami, Houston, parts of Bangladesh, Burma, and so forth.

          • shank15217
          • 13 years ago

          “Burma’s leadership may be evil and incompetent, but the results of the ‘cyclone’ up to this point would probably not have been substantially different with a democratically elected government.”

          So you are saying that a democratically chosen government in Burma would not make a difference? How much do you know about the history of Burma to say its a 3rd world country? You are out of freaking mind, I have family in Mandaly you just need to shut the heck up and stop talking out of your a**…

            • Saber Cherry
            • 13 years ago

            I lived in Indonesia for 2 years (a brief hop away from Burma) and I visited Thailand while there (getting a visa to Burma was and is nearly impossible, of course). The three countries are very similar in many ways… with the obvious exception of the fact that Burma sort of intentionally stays stone-age. I don’t know much (really, much of anything) about Burmese history, but I know quite a lot about their present state… such as the fact that wheeled transportation typically consists of ox-carts over dirt roads, which is not a possible means of evacuating millions of people in 24 or 48 hours to be out of the storm’s path.

            If you wish to tell me how a democratically elected government could have used Burma’s existing infrastructure and resources, with the warning they had, to avert this disaster, go ahead. But being angry won’t change reality.

        • AMDisDEC
        • 13 years ago

        Actually, if you take a unbiased examination of what Saber said, the analogy applies very well when you consider following 9/11 Bush had the support and backup of all the world, YET managed to make such a mess of things he reversed this support into America being one of the most disliked nations in the world.
        Compare that to Hector RUiz who was handed a great company by Jerry Sanders with the Opteron project well underway and support for all of the computer field and users, YET he manages to make such a mess of things, now the company is on the skids and he has lost the faith of many of his industry supporters.
        Two terribly incompetent leaders who shouldn’t be in Presidential positions, yet are. Whose leadership abilities are so poor they succeed in reversing what one would think was a fool proof environment.
        Sounds like a good parallel to me.

          • DrDillyBar
          • 13 years ago

          There are parallels there to Kevin Rollins, former CEO of Dell too. He borked up a fully functional company too, in less then 2 years. Michael Dell had to return to recover their footing. Likely similar reasons were responsible for Steve Jobs’ return…. etc.

            • Saber Cherry
            • 13 years ago

            Then there’s Carly Fiorina and HP. When she came in to power, she removed the pictures of Hewlett and Packard in the headquarters to put up her own picture instead, which is typical of the arrogance that also led her to buy Compaq and cause many of HP’s best employees to leave in disgust. Fortunately HP was able to get rid of her before the company was totally destroyed, but I don’t know how these companies have such a hard time evicting obviously incompetent CEOs. AMD does not have the huge cash reserves of HP or Dell, and even a brief period of utter misdirection could be fatal.

            It’s clear to all observers that AMD’s current troubles stem largely from the fact that Intel’s technology rapidly advanced while AMD came to a standstill… as soon as Ruiz took the reins, K10 or whatever next-generation architecture was under development was put on the backburner, as though Ruiz thought K8 with subtle alterations would somehow be AMD’s permanent product. Now he announces that he will return AMD to profitability with some new business model and corporate motto where performance is not important, proving this speculation correct.

            Um, really. Apparently the stockholders and board of directors are as dumb as he thinks they are. But if he thinks end-users are that dumb too, he’ll find out soon that he’s wrong. By that time the world will have one x86 CPU company left; the highly unethical one.

            • AMDisDEC
            • 13 years ago

            I was surprised to see Carly show up as an advisor for John McCain’s campaign. I’m more surprised that I’m still surprised.

            I’m pleased to see MetaRam’s new tech is getting off to a great start. Happy to see innovation abd a solid business plan is still rewarded.

            I can’t wait until the get to an IPO.

    • kvndoom
    • 13 years ago

    Read my lips: NO NEW TAXES!

    • Silus
    • 13 years ago

    I just don’t understand how can a company in such harsh financial situation, with potential job cuts, justify the huge salary of someone like Hector Ruiz. I’m sure that the people that may lose their jobs, are also thinking about that…

      • sparkman
      • 13 years ago

      The buck stops with the CEO. If your company’s CEO sucks, you don’t invent schemes to make his salary dependent on company performance. You fire him. Then you go shopping for a new CEO, and you roll out the red carpet in hopes of getting a good one.

      That red carpet treatment is normally worth it, because even if you pay $50 mil to the CEO, that’s nothing compared to the billions a big corporation generates when profitable.

      If the CEO owned some company stock, that would be nice, so he’ll have personal profit motivatation to perform. But having attitude about how CEO’s shouldn’t get paid unless the company is profitable guarantees you won’t attract a good CEO, which practically dooms your company.

      About Hector Ruiz, I have no idea if he’s a good CEO or not. Maybe AMD’s recent problems are purely a result of being outspent by the Intel monopoly. Maybe not, that’s for AMD shareholders to decide. AMD does seem to be doing alot of things right, aside from the TLB erratum and Phenom clock speeds that are merely “good” — but not great. I can’t really find anything to slam AMD over.

      • UberGerbil
      • 13 years ago

      At ~$1M his salary is a drop in the bucket in the scheme of things; however, given what has happened to AMD over the past year, it’s unconscionable that (a) he got a raise and (b) he’s the highest paid semiconductor CEO.

      §[<http://www.news.com/one-more-thing/?keyword=Hector+Ruiz<]§ (Yeah, he made much more than $1M in total compensation but given that typically involves exercising stock options, etc, it's not really germane to the discussion)

        • Silus
        • 13 years ago

        Which was my point. With his salary alone, a few of those that may lose their jobs, can remain at the company and probably do much more for AMD, than Hector ever did.

          • UberGerbil
          • 13 years ago

          Well, they still have to have a CEO (if for no other reason than to be the guy they fire when things go this badly). Corporate payscale and investor expectations being what they are, you’re still going to be paying him a few hundred thousand. It may well be that Ruiz should be fired from a performance standpoint, or even just because “the buck stops here.” But it’s not going to make any difference in terms of the people they lay off. And in any large corporation, you can stand to lay off around 5% of the people anyway, as there are at least that many that aren’t pulling their weight. The problem is that typically merit isn’t the sole basis for making that decision (and sometimes it has nothing to do with it).

    • UberGerbil
    • 13 years ago

    He’s saying they only just learned that they’re in a cyclic industry? Isn’t learning on the job basic truths about your industry something you expect of interns, not CEOs? They need to learn to “anticipate and prepare” for the inevitable /[

      • Meadows
      • 13 years ago

      He said nothing like that.
      “In [this] industry, we have [already] learned to anticipate and prepare for the inevitable downturn.”
      He is basically describing AMD’s history with the rollercoaster example.

      Naturally, I may have drunk too little coke, so corrections of this correction are welcome.

        • UberGerbil
        • 13 years ago

        Assuming Cyril’s transcription is accurate, I was quoting what he said, not inserting words he didn’t say. Given that this was prefaced by his acknowledgment of the problems with Barcelona and that he used “in fact” as a transition, it certainly sounds to me like he’s saying these are lessons they learned from the Barcelona debacle, not anything they had already learned at some earlier time.

    • DASQ
    • 13 years ago

    Where did this $2b cash margin come from?

    And does it count when you’re actually in debt?

      • UberGerbil
      • 13 years ago

      Even if you have debt, you still have to have cash (if you have a mortgage, do you never have any money in your checking account?) It still “counts” on the balance sheet; the real question is whether it is increasing or decreasing, ie whether you generate enough cash to fund ongoing operations /[

        • DASQ
        • 13 years ago

        I realize how the cash came to be, but my point was why are they floating about with $2b in cash when they’ve got mounds of debt and employee layoffs.

        I’d pour it all into R&D for the next generation that must be successful to ensure survival.

          • UberGerbil
          • 13 years ago

          They’re burning as much as $300M in a quarter (it varies quite a bit) — you don’t want to have so little cash on hand it looks like you’re going to be insolvent in just a few months. They’re already spending $2B annually on R&D. It’s not at all clear that boosting that by some sizable percentage would give them any additional payoff in the timeframe that matters (the R&D for the next generation was happening 6-24 months ago) but it could leave them in a questionable state as a going concern. You look too shaky financially, and it starts feeding on itself: nobody wants to partner with you, your suppliers won’t give you 30 days on receivables, the OEM contracts dry up. AMD is at the point where they need to do what they have to do to stop losing money; once they’re out of the red on an ongoing basis, they have to hope that all the R&D spending that was happening last year and the year before pays off this year and next — the 45nm fabs come on line, the revised chip designs pay off, the platforms (like puma) sell well, and eventually maybe Fusion succeeds.

          • ludi
          • 13 years ago

          For the same reason a person with $20k car loan might have $2k in his checking account: you’ve got to eat and pay rent in the meantime, and have a little spare that can be accessed immediately in the event of an emergency. No good rushing off to spend the $2k towards car loan retirement or something else if the next financial ripple to come along in your life forces you to then sell the car.

          • flip-mode
          • 13 years ago

          No offense, but you’d be a worse CEO than Hector. Businesses *NEED* cash. Tons of people start their own businesses by borrowing – they start a business by going into debt in order to get cash on hand. Cash is needed to pay the monthly bills, to send people on business trips, to buy pens and pencils and printer ink, and oh yeah, for R&D and salaries too.

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