As AMD fetes chip milestone, analysts fret about future

Concerns about Advanced Micro Devices future are overshadowing a significant processor shipment milestone.

Updated at 11:10 a.m. PDT: adding Walmart dv2 laptop information.

Concerns about Advanced Micro Devices' future are being aired as the company celebrates a chip milestone.

HP Pavilion dv2 packs a low-power AMD chip. Can AMD compete effectively with Intel-based ultra-thins?
HP Pavilion dv2 packs a low-power AMD chip. Can AMD compete effectively with Intel-based ultra-thins? Hewlett-Packard

The chipmaker said Wednesday that it has shipped 500 million x86 (Intel-compatible) processors since the company's founding in 1969. And to celebrate, AMD is giving away four Hewlett-Packard dv2 ultra-thin notebooks based on its low-power Athlon Neo X2 chip. But the laptop giveaway, ironically, underscores one of AMD's challenges.

Doug Freedman, analyst at Broadpoint AmTech, said in a research note earlier this week that the dv2 laptop has "failed to ramp," meaning it has not gained much traction in the market. Best Buy, for example, though offering a range of other HP dv series laptop models, has not offered the dv2 to date. (Update: However, Walmart offers the dv2 laptop.)

But Freedman's comments are mild compared to what some other analysts are saying after AMD posted disappointing financial results Tuesday .

A blog on ZDNet Wednesday cited a few of the most negative comments. "AMD's tepid top-line results/guidance and weak margins suggest continued execution issues and potential share loss," said Goldman Sachs analyst James Covello.

And J.P. Morgan analyst Christopher Danely said: "We believe AMD is losing share to Intel due to inferior products and is being hurt by lack of a Netbook processor...We would note Intel processor sales outgrew AMD by 13 percent during 2Q09 and are expected to outgrow AMD by another 3 percent during 3Q09."

And, as the ZDNet blog points out, maybe the most damning comments come from JMP Securities Alex Gauna: "Another disappointing quarter from the perennial CPU also-ran," he said, referring to AMD's business of making central processing units (CPUs).

Gauna added that ARM chip technology may make AMD even less competitive down the road as future devices adopt these chips. ARM is a low-power chip design used by Qualcomm, Texas Instruments, Apple, Samsung, and others.

Of course AMD doesn't see it this way. Dirk Meyer, AMD's president and CEO, said in a statement Tuesday that "new platform, microprocessor, and graphics introductions planned for the second half of 2009 position us well to improve (profit) margins and meet our financial goals for the year."

AMD also said Tuesday that during the second quarter Dell, HP, IBM and Sun Microsystems announced new servers based on the six-core AMD Opteron processor and that the ATI graphics unit introduced the first 40-nanometer desktop graphics processor, the first 1GHz graphics chip during the quarter, and held the first public preview of working silicon and drivers supporting Microsoft's upcoming DirectX 11 technology featured in Windows 7.

About the author

Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.

 

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