AMD’s derided deal is now a blessing, CEO says – MarketWatch

By Therese Poletti, MarketWatch


SAN FRANCISCO (MarketWatch) — Advanced Micro Devices Inc. Chief Executive Officer Rory Read has a lot to be happy about in his tenure of almost four years. But he appears far from complacent about the company’s progress.

The conversation about AMD

/quotes/zigman/216580/delayed/quotes/nls/amd AMD

— for years the perennial underdog chip maker to Intel Corp.

/quotes/zigman/20392/delayed/quotes/nls/intc INTC

 — has changed. When he took over in August 2011, investors were more concerned about the company’s balance sheet and its liquidity issues.

However, in the company’s last few conference calls, including last week’s earnings call, the questions from Wall Street have been about products and how soon they will begin to pay off.

“We have a lot of work to do,” Read said in an interview. “This is a transformation.”

Since his arrival from Lenovo Group Ltd.

/quotes/zigman/21902/realtime HK:0992

, Read has been working to diversify AMD, which was too dependent on PCs for 95% of its revenue. As the PC market has slowed, companies like Intel and AMD have looked to new markets and products for revenue growth.

Apple artificially inflating valuation: analyst

Ironically, it is one of AMD’s biggest, and most derided, acquisitions that is now helping pave its way: the $5.4 billion deal to buy graphics chip maker ATI, some of which it eventually had to write off. But as part of that deal, AMD purchased the Radeon family of graphics processors, and the newest generations are now powering the latest gaming consoles from Sony Corp.

/quotes/zigman/197524/delayed/quotes/nls/sne SNE

, Microsoft Corp.

/quotes/zigman/20493/delayed/quotes/nls/msft MSFT

 and Nintendo Co. Ltd.

/quotes/zigman/195847/realtime JP:7974


“You could argue that maybe we paid too much at the time,” Read said. “But it opens the door for embedded, semi-custom designs.”

He said when he joined AMD, the company was already in talks with the video game console makers but there were some setbacks before deals could be reached. “That business now has the fastest ramp ever,” he said referring to its graphics and visual-solutions business, which reported $734 million in first-quarter revenue, up from $337 million a year ago.

Indeed, there are still skeptics of AMD’s full recovery. Some are nervous about too much dependency upon the video game console market, know for its boom-and-bust periods. Others say the ARM-based server market is still too nascent, and Intel is going to strike back with lower prices.

Read and his team have set a goal of having 50% of AMD’s total revenue come from businesses besides PCs by 2015, including chips for gaming consoles, chips based on ARM Holdings Plc

/quotes/zigman/67211/delayed/quotes/nls/armh ARMH

designs for servers and a few other product areas.

Read, perhaps inspired by his visit to San Francisco, famous for the Gold Rush of 1849, made a gold-mining analogy in an interview. Gold miners with one to two veins won’t have as much success as those mining five or more veins, he said. “You are not dependent on one, and you are not dependent upon a duopoly.”

More from MarketWatch:

Apple’s plan to triple store count makes it its own worst enemy

Facebook tackles its most annoying posts

Summers: Economic pickup could come on unstable ground









Write a Reply or Comment:

Your email address will not be published.*


  • Audio
  • Electronics