Trouble at sea, Daamit
ANALYSTS ARE claiming that the merged AMD is having problems selling its processors in a newly competitive market.
As we've chronicled in these very pages, AMD has been cutting prices pretty aggressively, in a bid to gain market share (a tactic formerly adopted by ATI in its war with Nvidia). However, poor performance compared to Intel's Core line has seen the channel left with lots of AMD chips just kicking around and margins looking grim.
EETimes quotes the most learned Doug Freedman, of American Technology Research Inc, as saying that "AMD is taking prices down to levels the industry has never seen before in the low-end... We believe poor product mix and excessive channel inventory are limiting the impact of price cuts. We also believe that recent price cuts have been pushed out as they have proven unsuccessful in clearing the inventory or boosting top-line results."
AMD has been looking to grow market share in a bid to establish itself as a major thorn in Intel's side. There is, however, a downside to this strategy - there's a limit to how aggressively it can push up its market share whilst still maintaining its court claim that Intel is the bad boy monopolist that should be heavily punished for preventing competition.
The company has had a rough couple of months, including a difficult CeBit, with its ATI graphics division failing to show anything new, publicly, at the show. Our own Theo reported that ATI's partners are getting antsy about the lack of new products.
Meanwhile, rumours roll on that AMD could be the target of a private equity buyout. Joanne Feeney, an analyst at FTN Midwest Securities, said this month that AMD is under pressure to get some cash in after its ATI acquisition. AMD's market cap is about $7.5 billion, which gives it plenty of room for growth against Intel, which is at around $110 billion. Private equity types like growth potential, and will point to the good things AMD has rolled up in the last year - such as the deal with Dell, an increase in stock price and the potentially lucrative buyout of ATI. Those factors have to be balanced against what, it appears, is the poor market performance of its actual technology.
The INQuirer
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