Speaking to stockholders, AMD Dirk Meyer says the recession is changing the way people and businesses buy products and determine value. Buyers are more discerning and are demanding more for their IT dollar, and that is dovetailing with the message AMD wraps around its products. Furthering AMD's drive to growth are such moves as spinning off its manufacturing facilities and merging its chip and graphics businesses.
The way Dirk Meyer sees it, things are breaking just right in 2009 for Advanced Micro Devices.
Meyer, president and CEO of AMD, told company stockholders during their annual meeting May 7 that the global recession was forcing businesses and consumers to become more conscious about how they spend their money, which plays into one of the chip maker's key messages around its server and PC processor platforms.
Add in such moves as the successful launch late last year of the 45-nanometer "Shanghai"
Opteron chip, work on the upcoming six-core "Istanbul"
processor and other products, the spinning off of its manufacturing facilities
and the reorganization May 6 that merged the company's chips and graphics units
, and the pieces are in place for AMD to grow its business, he said.
Meyer said he expects AMD, which has been battered by the recession and its ongoing competition with larger rival Intel, to return to profitability by the end of 2009, no small feat for a company that lost $416 million in the first quarter.
However, he said, the market "is very much moving in our direction." The economic turmoil is convincing buyers to be more careful about how they spend their money.
"From home users to Fortune 500 CEOs, the industry is experiencing what I refer to as a shift to value," Meyer said. "Buyers are becoming more discerning about paying for only what they really need and getting the best experience for their dollar."
AMD has made such issues as energy efficiency a key component of its product platforms. However, so has Intel, as illustrated by the recent launch of its Nehalem architecture, which is designed to improve performance while reducing costs.
AMD's reorganization and merging of its CPU and GPU businesses will be a differentiator over Intel, Meyer said.
"The trend [toward a more value-conscious buyer] does indeed bode well for our unique blend of company assets," he told stockholders. "Only two companies in the world can develop and deliver in volume leading-edge x86 processor solutions. Only two companies in the world can develop leading-edge graphics, and only one company-and that is AMD-has the ability to do both."
Integrating the CPU and GPU technologies was a major driver in AMD's $5.4 billion acquisition in 2006 of graphics vendor ATI. Three years later, the move to merge the two units was made.
However, Intel, in its upcoming "Sandy Bridge" chip architecture due in 2010, will offer integrated graphics capabilities.
Spinning off the manufacturing facilities into a new company called The Foundry Co.-AMD's so-called "smart asset" plan-was a "bold action" that will bring the company back to financial health, Meyer said.
"With that bold action, we were able to significantly improve our balance sheet [and] guarantee our company and our customers continued and ongoing access to leading-edge technology with the capacity to deliver what our customers need and want from us," he said.
AMD announced the plan in October 2008, and the deal closed earlier this year.
AMD also is expecting the release of Windows 7
by Microsoft to help drive demand for its PC chips. The operating system is officially due in early 2010, but industry speculation is that it will be released later this year.
AMD is gearing up for the new operating system, announcing over the past week that its Windows 7 driver received Windows Hardware Quality Lab certification from Microsoft, and in March launched a Windows 7 unified graphics driver, the ATI Catalyst 9.3 software suite.