I like Rory Read and the team he is putting together at Advanced Micro Devices (NYSE:AMD). He comes off as an honest, no-nonsense individual and quite frankly is a breath of fresh air after former CEO Hector Ruiz left an indelible mark on the name "AMD". It's easy to see why Mr. Read took the job of running AMD: if he actually pulls it off, he'll go down in the history books as an executive genius. While the jury is still out on whether Rory will be able to pull this off, I would like to highlight one of the incredibly smart moves that the company - under his leadership - is making.
Kabini - Getting An Edge On Intel and ARM
Intel (NASDAQ:INTC) owns the high end PC processor space; the firm's high end products simply cannot be beaten on a raw performance and, more importantly, performance per watt basis. However, it seems that AMD realized this and instead attempted to gun for Intel where it hurts - in the Atom. See, Intel's original Atom processor core wasn't exactly designed to be a superstar. While as part of the "Clover Trail" and "Medfield" SoCs it still holds up quite nicely in ARM (NASDAQ:ARMH) like power envelopes, it is widely viewed as a sub-par PC processor.
AMD, realizing that its niche isn't in trying to make huge dies to compete with Intel's smaller dies, apparently decided to focus all of its energy on chips based on its low power X86 core known as "Jaguar". To this end, AMD designed two full system-on-chip products: "Kabini" for 9W - 25W notebooks, and "Temash" for <6W tablets and convertibles (although some numbers floating around suggest 8W for the quad core edition).
ARM based chips can't run full Windows - just the crippled Windows RT that Microsoft (NASDAQ:MSFT) didn't even bother to mention on its latest earnings call. In fact, it instead trumpeted Intel's upcoming "Bay Trail" and "Haswell" processors for upcoming Windows 8 notebooks, convertibles, and tablets. The nice thing is that AMD can still get in on these new form factor(s) of PC with its fully Windows compatible X86 processors.
More importantly, if AMD is to be believed, "Kabini" and "Temash" will have a roughly 1 quarter advantage on Intel's upcoming "Bay Trail" Atom, which seems to be scheduled for "Holiday 2013". This is a window of opportunity that AMD absolutely cannot afford to not exploit.
However, the real "praise" here is that under Rory Read, AMD put the next generation "big core" processor on the backburner and instead focused on the high volume, low power X86 part that has a real chance of offering a pretty interesting value proposition. AMD's numbers show that "Llano" and "Trinity" aren't doing that well, but "Brazos", the prior gen low power APU based on the "Bobcat" core, was a smash hit.
Thanks for caring about trying to make shareholders money, Rory, and not trying to win the speed race against the juggernaut. You may be the first CEO in AMD's recent history that doesn't have an ego so large as to obstruct profitability. Shareholders could make out big on a run back to $5-6 if AMD can deliver on its promises...but Wall Street still rightfully remains skeptical, as AMD has had a history of over-promising but ultimately losing money.
Disclosure: I am long AMD, INTC, MSFT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.