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Tom Luongo

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  • AMD's Dual Graphics Will Disrupt Gaming Market [View article]
    @asH9 and Stephen Good comments guys. I saw the HSA results like 2 hours after WccfTech posted then and if I hadn't been busy with other things would have put something up quick about it. There's always Monday. :)

    ARM Server -- Calxeda as a proof of concept company without enough capital to make the transition from 32 to 64 bit and didn't have the pull within the industry. AMD does and that's a differentiator in this space.

    HSA is a game-changer and no amount of talking it down will alter that. I've been bullish on MSFT for a while but unless they truly embrace HSA and multithreaded GPGPU they will be in trouble in how they shift away from Windows/Office licensing revenue. Cui AAPL?
    Feb 16 10:27 AM | Likes Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @gzubeck And what do you think the semi-custom business is? It's a way to sidestep Intel.

    You neglect to mention in your math example that the lower revenue/higher margin is playing right into the same fight that they've already lost. So, they might make that for one product cycle of 9-15 months. But the semi-custom console wins will bring in that slightly lower income on rising net margins for 5-7 years.

    You are right it's what money you take home as free cash flow that matters. And if those 45% gross margins require 10% more R&D and depreciation over time then where's the benefit. You get the same net income and more risk product to product.

    Don't focus on the company-wide gross margins. That's still in flux. There are still issues with the CPU/APU business that are in transition and keeping profitability on that side of the house down. We'll know how far off they are by the end of Q3 with APU and server sales.


    "It's what you net after expenses not your gross income. Unless your really big and your markets are not perversely affected by Intel at a whims notice then smaller margins can work."

    I agree with this, but this is not the point of AMD's semi-custom work. Intel couldn't provide those console solutions. So, right there is your example of a revenue stream not tied to anything Intel does and it's currently accounting for 25% of AMD's revenue and 90% of its profits. For work whose R&D is done, contracts signed with a predictable work plan and products that are in higher demand than were originally expected.

    What do you not like about that? This type of revenue forgives a bad product launch. NVidia is learning this now with Tegra. The T4 and TK1 are likely never going to be used in their original intended markets. They have shifted to try and recoup development costs by moving them into other applications -- cars, high-end tablets, Chromebooks, etc. But, if they had reusable IP blocks and more flexibly designed architectures they could build versions of those chips for little extra development cost to cater to specific client needs in very little time.

    This agility is the essence of why the gross margins will be lower but the tradeoff is more guaranteed revenue over time. If AMD had two more semi-custom wins like half as big as the Xbox One, this company would be making $0.20 per share every quarter on smaller revenues than NVidia.

    The rest of AMD's business is in flux and has questions hanging over it.
    Feb 15 01:54 PM | 5 Likes Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @rg Very good comment. Thanks for saying it so directly. I don't see process node beyond 28nm at this point to be the main driver in the near future.... by late 2015? Sure, but in 2014 I think the cost/benefit relative to the market need is too high.

    If I'm worried about anything it is that Carrizo will be 28nm and a H2 2015 part.
    Feb 15 11:55 AM | 1 Like Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @ta I disagree. TMSC has as much incentive to move to lower process nodes as INTC does as long as the economics make sense. Samsung is too big a conglomerate to compare to Intel. They are different companies. Samsung with its own fabs to build its end-user products makes sense.

    AMD and INTC make second-order goods which are used to build end-user products. Having that opex/capex overhead makes little sense when the cost of implementation is rising exponentially with each node shrink.
    Feb 15 06:19 AM | 4 Likes Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @Type What Stephen said. We'll see an acceleration of sales for the consoles for the next 3 years while net margins for that business will improve as costs/yields improve.
    Feb 14 08:25 PM | 1 Like Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @Gzubeck You still don't get it. Gross margin is less relevant to the semi-custom business b/c the business model is different. R&D costs are shared, etc. So, look at the numbers again and see that the semi-custom business is driving ~20% net margins and the cost structure is planned out over a 5-7 year lifespan of practically guaranteed sales. They don't have bad margins on the game consoles. They are the best overall margin products they had in 2013. Look at the earnings report.

    And that comment you quoted was aimed squarely at Kaveri and Beema/Mullins, not the semi-custom business. If those margins do not improve then there is a problem unless Sea Micro/Seattle begin to take off.

    The 2-3 year problems was 2-3 years ago, not as much today. Some don't like the diversified revenue model (Brokeagain73, for example) others embrace it.
    Feb 14 08:23 PM | 1 Like Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @France I don't. That Newegg is still selling them above MSRP and TigerDirect was out of the 7850k the other day doesn't look bad, though.
    Feb 14 06:05 PM | Likes Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @Stephen No, you're right and this is part of where the volatility comes from. For those of us in the bull camp the point of the article was to use the volatility to our advantage while the market catches up. If Read et.al. bring this all together, $500 million will be peanuts.

    Q2 and Q3 will tell the tale as to whether the market is buying the chips AMD is selling or not.
    Feb 14 06:03 PM | 2 Likes Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @mKiwi We do aim to please here at Chez Luongo. Thanks.

    18% net margins are for Graphics and Viz. Solutions, not the company as a whole.
    Feb 14 05:59 PM | 2 Likes Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @Stocks Wall St. will do what Wall St. will do. I would listen to the presentation I linked above. The GS guy was very positive and Kumar did a good job at both explaining the situation and giving a mea culpa on the communications front.

    No one likes uncertainty and AMD will simply have to continue providing reasonable guidance and mild outperformance until all of this either comes together or fails miserably. Obviously, I'm expecting the former rather than the latter but YMMV.

    Seasonality is what it is and it is just as present in the CPU/GPU market as it is in the console market. As this semi-custom business grows the seasonality should smooth out as chips make their way into different markets.
    Feb 14 05:51 PM | 1 Like Like |Link to Comment
  • Markets Still Unclear About AMD's Future [View article]
    @Stocks No, I think that sell side analysts are generally just slow to grasp new wrinkles in the market for fear of being dead wrong. It's not personal to AMD. But, the company's history does not help in this regard. This is why I brought up the management angle in this article and it is something I'll try to highlight in future ones. Culture change in an organization is difficult to pull off but it starts at the top and works its way down.

    Read is a no-nonsense, focused person and probably benefits a lot from being so far removed from the root of AMD's problems of the past that he can aggressively pursue new strategies and personnel without much internal resistance. This is part of the reason they were able to perform the turnaround so quickly and successfully.
    Feb 14 04:02 PM | 9 Likes Like |Link to Comment
  • AMD's Dual Graphics Will Disrupt Gaming Market [View article]
    @asH9 I'm sure that there has been some parallel development but, of course, AMD has been mum on this front. I have no clue as to how long after Seattle any APU variant will take. I note that Devinder Kumar the other day referred to Seattle as an APU but there is nothing released which says that there is any GPU on-die, so that was likely a simple slip by him.
    Feb 14 12:44 PM | Likes Like |Link to Comment
  • AMD's Dual Graphics Will Disrupt Gaming Market [View article]
    @asH9 I would love to see AMD quickly develop an ARM SoC similar to the Jaguar ones in the Xbox and PS4. We know that Sony will not work with NVDA (cue the NVDA bulls getting ticked off) so the question is how quickly that can get spun up. It's at least a minimum of a year away unless it's development has been under NDA.

    @Kj My Wii's primary function has been to stream Netflix for a long time, now it's my blu-ray player or mini-PC I have connected to the TV.
    Feb 14 08:16 AM | Likes Like |Link to Comment
  • AMD's Dual Graphics Will Disrupt Gaming Market [View article]
    @stock I'm glad you had a good quarter but I have to ask, "Where's the growth?" Good revenue. Solid gross margins but no diversification and the cash cow markets slowly eroding as R&D costs rise and return drops. Then we add in gutting shareholder equity to finance a stock buyback and pay a dividend. This is what I've been talking about.

    The earnings call was about as information rich as a press release. No one asked anything and no one said anything.

    Funny, both AMD and NVDA have similar quarters and give similar forward guidance (~10% drop in revenue) and one stock tanks while the other soars.
    Feb 13 02:20 AM | Likes Like |Link to Comment
  • Early Mantle Results Support AMD's Low Power Strategy [View article]
    @Broke I know you have 'no problem seeing things' the way you do. I disagree and why is that a crime? Because NVDA had a good quarter selling dGPUs? Your look at the technology comes to a different conclusion than mine. If you're right about NVDA in the future then back it up for real.

    If you're so smart write your own articles, get paid for your time and flaunt it.

    In other words, walk the walk and take your NVDA theories there. That's where they truly belong. That's what S/A wants. So, go do that and prove us all wrong.

    I view tech as product not as tech. Therefore, I have to talk both tech and economics.
    Feb 12 11:56 PM | 1 Like Like |Link to Comment
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