Advanced Micro Devices is hurtling toward what could beas the second quarter draws to a close next week. Wall Street expects the company to have lost 84 cents per share for the June quarter on $1.26 billion, up 4 percent from the same quarter a year ago. That compares with a loss of $611 million or $1.11 per share in the first quarter and a net profit of $88 million or 18 cents per share in the second quarter of 2006.
AMD needs a fix, and fast. A $2.2 billion
But is Barcelona, which is expected sometime in the third quarter, a Band-Aid or a tourniquet? The company's problems could be broader in scope and more than one good product launch can fix.
"AMD really needs to round out their product portfolio," said Jim McGregor, an analyst with In-Stat. "If not, a lot of the market share gains they made they are going to give back. They've got a critical 12 months ahead of them."
Intel is expected to keep the pressure on with server price cuts around the time of Barcelona's arrival. The new realities of chip pricing could force AMD to re-examine its manufacturing strategy. And its ambitious project tois years away from fruition.
An AMD representative said the company will have more to share about its future road map and its near-term plans for becoming profitable once again. The company will report its second-quarter results in July and hold an analyst day shortly thereafter, he said.
AMD's current mess starts with tough competition from chip king Intel. A price war , ostensibly to clear out older products ahead of the Intel Core launch, has persisted into 2007, as AMD has grappled with the market's response to launched in late 2006.
But Intel chose aby building server chips with two dual-core chips together in the same package. AMD, on the other hand, chose a more complicated design in which all four cores live on the same piece of silicon. The company believes this will deliver a because all the cores can communicate directly with their neighbors.
Andmade it even harder for AMD to compete as the calendar turned from 2006 to 2007. The company was already in the process of aggressively discounting its processors when it was forced into even steeper discounts when one of its customers, believed to be Dell, left it stranded with a bunch of unsold chips.
Analysts believe that Barcelona will likely outperform Intel's Clovertown generation of quad-core chips from 2006. The problem for AMD is that Intel is preparing to launch a
Plus, Intel's plan for 2008 is to mimic the design characteristics that made AMD's Opteron chip a winner. Thewill come with integrated memory controllers and point-to-point interconnects, design characteristics that allowed AMD to enjoy a significant performance advantage from 2003 until last year.