ATI acquisition costs AMD another $880 million

ATI acquisition costs AMD another $880 million

Summary: AMD has announced that it will take charges totaling $948 million in its recently ended quarter for goodwill impairment and restructuring. A whopping $880 million of that is made up of charges for related to its acquisition of ATI Technologies.

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AMD has announced that it will take charges totaling $948 million in its recently ended quarter for goodwill impairment and restructuring. A whopping $880 million of that is made up of charges for related to its acquisition of ATI Technologies.

This latest round of write offs mean that AMD has effectively written off more than half of the total ATI purchase price.

So, $880 million on ATI charges, $36 million in impairment charges related flash memory chip maker Spansion, $32 million in restructuring charges for employee severance ... it all adds up. In fact, about the only good bit of news is that AMD managed to claw back $190 million through selling 200-millimeter wafer fabrication tools.

Bottom line - none of this bodes well for AMD's Q2 08 earnings release scheduled for Jul 17. I'm expecting the company to post yet another round of losses, which will make it the seventh in a row for the chipmaker.

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To be honest with you, I worry about the hole that AMD has dug for itself, and it would seem that its answer to the financial problems is to keep digging. Stock is at a 5-year low and the no one at the top of the company seems to be coming up with anything remotely resembling a recovery plan. that's a shame because we'll all suffer if Intel doesn't have a serious competitor.

Thoughts?

Topics: Processors, Banking, Enterprise Software, Hardware

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14 comments
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  • Fire Hector

    That's where they need to start. This guy has a terrible, terrible track record and it's showing its colors now. AMD has some AMAZING engineers and talent. Probably some of the most talented processor engineers around but bad management = failed products. The Phenom was a disaster, hype on it was far too high for the little it delivered.

    Right now the 4850/4870 and soon the 4870x2 are the only reason I think AMD can recover from this mess. It's an amazing showing from the side of the company that hasn't competed with nVidia since their 9800 line.
    LiquidLearner
    • Agreed

      The 4800 series is seriously hammering nVidia. Interstingly enough, the 4800 series borrows the designs of the core2duo. Compare this to nVidias beomoth of a chip. Now if AMD can use the knowledge and processes that have made the 4800 series so good and apply it to their 486 range of CPU's and Intel could be in for some serious competition.

      But as you, that depends on how this knowledge is managed. And currently, it is not very well. If I were a shareholder I would be calling for his scalp.
      Bozzer
    • You got you wish...

      http://blogs.zdnet.com/BTL/?p=9364&tag=nl.e539
      fortierj
  • The real loss with be ATI

    I knew when AMD bought them it was over. sigh...
    No_Ax_to_Grind
    • Maybe not...

      The acquisition is over. I think Intel will stay behind for a while in the integrated GPU area. AMD stands to make some money in the notebook area. Longer term as libraries for taking advantage of the GPU as a numerics or streaming processor mature, this could work in their favor on the desktop. They need to make some decent commodity integrated GPUs that can serve as co-processors. Besides games I am thinking of DVD writing.

      Especially if GPU is on die, using 45nm processes they could have some serious power savings, cost savings, be attractive to OEMs (easier to dissipate heat, and less board real-estate and layout).

      Server-side an on-die GPU with some serious horsepower could be helpful in HPC applications.
      DevGuy_z
      • Agree

        Sadly, AMD (and pre-sale ATI) has been behind the leader for the last couple of years. It has seriously affected the bottom line.

        Now, though, the AMD processors are back in the running and ATI is, by many account, on top temporarily in the graphic market. Intel's graphics are notoriously bad (though I have several i945s for desktop work). Now that the EU is looking into Intel over anti-competitive measures, AMD has a real opportunity to sell a complete system. They just need a really good chipset, and they will have the integrated system of choice.

        I think the next two years actually look pretty good for ATI, but no one in the computer industry is really safe save MS.
        daengbo
  • Hold your horses

    Is the charge related to goodwill impairment? As in, non tangible? In that case - it's a good thing. See, it does not negatively affect the cash flow - the thing that really matters, but creates accounting losses that reduce the tax liablity and help cash flow.

    You should be getting worried if it's the charge from operations, but the operations side at ATI at the moment is a lot healthier than the operations at the processor division. And the "platform" considerations are less attractive because of the processor side, not chipset / integrated graphics side.

    Actually, the latest round of ATI products is quite capable and actually, for the first time in a long time, has had an impact on the market and nVidia - ATI's competitor.

    The last time AMD processors made such a splash was, oh, before Core.
    ibarskiy@...
    • The ATI 4800 series

      Are to nVidia what the core2duo chips were to AMD.

      Now if they can use this knowledge and trasnfer it to their CPU division.

      Well, I imagine that they are doing just that. If the management are not incompetent of course.
      Bozzer
  • all a HOax

    >Stock is at a 5-year low and the no one at the top of the company seems to be coming up with anything remotely resembling a recovery plan.<


    they wont admit that the chip set solution that ATI
    has and Intel uses is the only one that will meet the
    Digital Tv era... bad news for nvidia

    they stole your Christmas last year 2007 selling trash
    even with 3.0Ghz and max memory it only floats at best..

    stop the lies !
    computing industry sucks.
    not of this world
  • RE: ATI acquisition costs AMD another $880 million

    >>core2duo chip
    seems to have more horses than it pulls.
    disk i/o at 40mbs seems cart in pull...
    anything digit ed still
    slow very slow for quality...
    playback 29.97 just floats as well !
    not of this world
  • Sounds good to me

    Bodes well for my INTC stock.
    ParrotHeadFL
  • RE: ATI acquisition costs AMD another $880 million

    I, too, am sad to see AMD doing so poorly. I am preparing to build a new computer capable of playing present and future games, and I really can't afford an Intel/Nvidia build. That leaves me with AMD/ATI. I've always been an AMD user (over 10 years now) and an Nvidia user, but now I'm stuck with concerns that my new computer may be an anachronism if AMD goes belly up.

    PS: "Not of the world" is obviously an expert in the field because he seems to think his nonsensical dribbling actually means something...
    ELontano
  • RE: ATI acquisition costs AMD another $880 million

    Is there a reasonable amount of time, in which, AMD should recover?
    jasahasch@...
  • Q3/Q4 could be a different story!

    What I'm really hoping for is a better processor from AMD. The Phenom is a great concept, but doesn't deliver. Hopefully the new 45nm Phenoms (which should be coming out soon) will perform better, or at least remain competitive in their price range.

    Thankfully with the recent success of the ATI 48XX, and Phenom 45nm coming shortly I think AMD/ATI can show some better figures for Q3 later this year.

    Hmm..maybe I should buy stock now....

    ----Side Note---
    Actually looking at some benchmarks of the new Phenom 45nm is looking pretty good. At least competitive if the price doesn't change too much!

    Look at the Super Pi on the Phenom 9600 (65nm):
    http://enthusiast.hardocp.com/article.html?art=MTQyMiw2LCxoZW50aHVzaWFzdA==

    Look at the Super Pi of this Phenom (45nm):
    http://www.tweaktown.com/news/9814/amd_phenom_x4_45nm_deneb_caught_in_the_wild/index.html

    ----

    Btw I'm not a fanboy, I just like seeing underdogs win once in awhile. :) Competition is good for the consumer.
    fortierj