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Present Issues and the Future
Present Issues and the Future
HWZ: Recently, there have been rumors/predictions of cash flow problems stemming from the ATI buyout, specifically because of the huge loan taken out on it, adding in factors of your new proposed billion dollar plants, are these just pure speculation? Can you comment on this?
Henri Richard: Sure, but I can only say this and talk on my personal experience. When I joined AMD 5 years ago, our balance sheet was extremely weak and I remember very well talking to Robert Rivet, our CFO and he gave me a very clear plan on how he was going to fix the balance sheet and he executed every step of it. Today, when I go talk to him about our cash flow, he has a very good plan in place. And I have no reason to doubt that the same man that did a fantastic job 5 years ago can't do it again. There is a lot of speculation and rumors going on, but I'm not worried about our cash flow position.
HWZ: AMD has been operating on a very low profile in the desktop space over the past 6 months, quietly releasing new lines of processors, such as moving to 65nm, beefing up your energy efficient models and constant price cuts. How difficult has it been for AMD to maintain competitiveness and sustain growth?
Henri Richard: Well I think what's been really frustrating is that I've been going around the world and people think we've been too quiet. I take it very seriously because I think it's true, I agree. But, we are a company that's been always operating on the basis of saying the truth and not hyping things. I've been recently quoted because the competition has been really trying to use, what I consider to be unethical practices to hype their products. I'll give you two examples. First, everyone keeps quoting Intel's power envelop, but forget to include the Northbridge. If you're comparing a processor without a memory controller, which is in the chipset to our processor that has an integrated memory controller. That isn't a fair comparison, but everyone allows them to do that. We keep calling foul, we keep saying it is the responsibility of the analysts and the press to report accurate information. And comparing an Intel CPU without the NB to our processor isn't fair, but that's the way it is.
Recently, I've been reading a demonstration of their G965 chipset against a Radeon X1600 and it is clear that the demonstration was rigged. I think that this is not what we would expect from a market leader. It tells me that Intel is under a lot more pressure that they want to admit.
We're definitely going to change a little bit and probably be more vocal, more over the radar than under, but fundamentally I don't believe that two wrongs make a right and we're going to continue to sit this through.
For example, when we launched a new line of 65nm products; from an end user perspective, it isn't really interesting because an end user doesn't care if its 90nm, 65nm or 45nm. What they care about is what product will they get, will it do the job and what price are we talking about. So, on this very question, I'm somewhat divided. On one side, yes, we should make more noise on our products, but on the other side, ultimately it is important for our customers, our OEMs to position their products right, and we rely on them to do the right thing in the market place to serve the end user. I don't think we'll change that fundamentally, but I hear you.
HWZ: AMD is no longer considered an underdog in the microprocessor industry having lead through innovation over the past few years, but now that the gorilla has awaken and fought back, what lies ahead for AMD?
Henri Richard: We launched Opteron in April 2003, we're now in April 2007. That's four years. It's been a good fight, but it's now time for us to have a new architecture. Today, the Athlon 64 and Operon dual core processors are still providing very good value at any price point. You get a better processor. We used to have an enormous advantage and now we don't, but it took Intel four years to catch up. That's not bad for a smaller competitor. Now, we need to bring out our new generation of products, and that's Barcelona. It is coming this Summer. That's when we'll start to make a lot of noise. That's just the reality. My products are still very good, they're still very competitive. They're still providing the best value in the industry. But they don't have the newness of the competition, who just launched a whole new set of products, with a new name, etc. That's what you're seeing. They're on the attack and we're on defense, but as soon as we have our new products, that will change.
HWZ: So in your personal opinion, where do you see AMD heading to?
Henri Richard: Come summer, well we've got the Barcelona, R600, R610, 630 and we've got a lot of new products coming into the market. That will give us lot more competitive line-up. Customers that we have today are very different from what we had five years ago. The product portfolio we have today is different from five years ago, so people who are looking at the current situation and saying, Well this is 2002 all over again, are missing the point. Yes, there is fierce competition out there and yes, we woke up the gorilla, but the environment is very different.
We're now a worldwide player, with very good market share in almost every territory in the world. We have a good business relationship with every single large OEM in the world. We have a portfolio of technologies that goes beyond the microprocessor, we're into handsets, we're into digital TV and now graphics of course. That's not to say I don't expect two or three quarters of very tough battle, but I think that the way that AMD will re-surge will be very different than what happened a few years back.
Our vision is solid, our customers are very enthusiastic about what we can bring to the market. A lot of people understand that this industry needs balance and actually believe that AMD can bring this balance. I expect tough fighting, but I expect also that we will be able to demonstrate that within the next 12 months, we will be back on a very good competitive position. We will continue keep the gorilla on its toes.
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