I'm really worried about AMD ...

I've been worried about AMD for some time now, but with rumors of a 5% cut in workforce, I'm now at the point where I'm really worried about AMD's future.

While I don't agree with the The Inquirer that a 5% cut in workforce should be labeled as "massive", this rumor combined with the speculation that AMD is going to spectacularly miss earnings predictions for this quarter does suggest that there is something rotten at the company.

Bad times have shrouded AMD for many months now.  The company engaged in a foolish price war with Intel (a company with very, very deep pockets) which, while it was good for consumers because it drove the price of processors into a nose dive, wasn't good for AMD.  The company bought ATi, which in or itself wasn't a bad move but it did saddle the company with a considerable debt.  The flow of new, innovative stuff from AMD has also dried to a trickle, and when a product did show promise, such as the Phenom, problems dogged the release.  AMD has relied too much on marketing spin and gone from where it was just losing money (a phase that many companies go through) to hemorrhaging money at an alarming rate.  At a time when financial markets are tightening, and with nothing exciting coming down the pipes, I can't see the company continuing for another twelve months doing the same things it has been doing over the past year.   Sure, AMD offers value for money at the lower end of the spectrum, but down there the margins are razor thin.

So that leaves me worried about AMD's future, and the effect that will have to the entire chip industry.  Not because I have any affiliation with the company, and not because I buy AMD processors (I do like ATi graphics cards though, partly because I like the drivers, but to be honest I see 2008 being the year that I go back to nVIDIA) but because we need AMD to keep the pressure on Intel and to keep innovation going.  I fear that without competition, the processor sector will start to stagnate and we'll be plunged back to the dark days of the 486 when innovation crept forward at a snail's pace. 

Thoughts?