AMD treads water in Q1, promises a path to profitability

By Scott M. Fulton, III, BetaNews

April 18, 2008, 12:51 PM

The long road to writing with black ink again may at last be coming to an end, said AMD's chief executives yesterday. But that depends on more than a handful of factors boding well, including Opteron CPUs suddenly giving it no more trouble.

There may yet be light at the end of AMD's dark tunnel, its chief executives tried to reassure analysts during its quarterly conference call yesterday afternoon. That light will start to shine in the second quarter, and could be pretty bright by the third quarter.

The "path to profitability," as AMD's three chief executives put it, looks something like this: Graphics card sales will continue to rise, as its ATI division was actually its star performer in the last quarter. The Puma platform will be introduced in July, which will be AMD's first serious response to Intel's Centrino Duo. That will hit the crest of the back-to-school buying season, so it will stop AMD's bleeding of market share among consumers -- and executives were frank about addressing that problem and not couching it in euphemisms like "seasonality."

But the reason for plugging the leak is to help make way for the real savior of the company: its new wave of quad-core Opteron server processors. In other words, AMD wants to put the consumer market back in check so it can focus more attention on re-taking the server market, where for a while it actually held a lead on Intel.

And for the first time, AMD chief financial officer Bob Rivet spoke of the possibility of raising the frequency for its Barcelona and later Shanghai architecture processors to help make up the performance gap at the high levels. Intel has already busted the 3.0 GHz barrier at a time when frequency had been written off as a necessary component of the value proposition. It's certainly necessary now, especially while AMD is stuck at around 2.6 GHz, reinforcing the public perception that Opterons are restricted.

"The response from customers has been enthusiastic, as has been the response from end users," CFO Rivet told a J&P Securities analyst, referring to his company's most recent releases of quad-core Opteron server CPUs, and its subsequent adoption by partners such as Dell and HP. "We've talked about, in the past, some of the marquee cluster wins that we generated and served, actually, with Rev. B2 of the product [Barcelona]. Rev. B3 is stronger, we'll be able to increase frequency over time, the product is terrific in the high-performance computing space where floating-point-intensive applications reside, and in addition, in virtualized data centers, the product really shines."

One other major partner will be adopting Opterons over the next few weeks, noted CEO Hector Ruiz at multiple points, though he was cautious not to reveal that company's identity.

Next: Those pesky consumers, and why success there could be a problem...