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Very interesting if true. First the smoke and mirrors with product releases, and now perhaps financials? Intel may be ruthless to competitors, but Intel does show extreme loyalty to its stockholders; an area where AMD has left much to be desired which is evidenced by AMD's sub $5 stock price.

http://www.overclockers.com/tips01360/

Quote :


More Smoke and Mirrors . . .
Ed Stroligo - 7/12/08

As we mentioned yesterday, AMD is writing off another $880 million off its investment in ATI.

What should you make of this?

In all likelihood, AMD has been shopping around the consumer products part of what used to be ATI and found that it isn't going to get much money for it, nowhere near what they paid for it.

So what they did was the accounting equivalent of slashing the price for the division before actually selling it.

Why would they do that? Well, if they hadn't done this, if they sold the division next week or month, they would have to show a huge loss on the sale of the division. So instead, they're taking the loss now, so when the sale happens, it will look like AMD broke even or maybe even "made" money.

Of course, if you have a memory that lasts more than a week and math ability greater than a gnat's, you'll realize that six is one-half dozen of the other, and it is, but many have neither and will get fooled by the smoke and mirrors.

Another game AMD appears ready to play involves the sale of the fabbing equipment from Dresden.

Quick accounting lesson: If you're a business and you buy equipment for the purpose of making money, you are generally allowed to deduct a portion of what you paid for the equipment against your profit/tax each year as you use. This is usually called depreciation, the idea being that you gradually lose the value of the asset as you use it.

Depreciation is only a very rough measurement of this loss, and very often, a business can depreciate the entire cost of an item, but can still sell it and get some money for it. When that happens, the business has a gain on the sale of the property, and must add that gain to their profit/tax.

So, for instance, if AMD bought $1.5 billion of fab equipment for Fab30, depreciated $1.2 billion of that over the course of years, then sold it for $500 million, they would have a gain of $200 million, which is roughly what AMD actually did.


Such an event is perfectly normal and natural. It only becomes funny business when it comes to characterizing the nature of the gain/profit.

Say you own an auto repair shop, and you own a lot of expensive equipment. Making money by using the tools is one thing, making money by selling the tools is quite another. For one thing, once you sell the tools, you aren't going to be making any more money by using them in their business. You had a one-time gain, as opposed to a regular day-in, day-out income.

It is a general, basic accounting principle that you are supposed to separate any one-time gains and losses from your regular, ongoing income/losses. This is to let people easily see how the regular ongoing business is doing.

To put it mildly, AMD has been playing fast and loose with these rules in their public presentations the last couple years, calling ongoing expenses one-time and vice versa, and it looks like they're going to do it big-time again next week.

This report indicates that AMD plans to add the gain from the sale of its Fab30 equipment to its gross margin. That's accountantese for saying that they're going to treat the sale of fab tools like it were the sale of CPUs, treating a one-time gain like it were regular ongoing income.

Why would they want to do that? Well, a few quarters ago, the executives said that they would reach "operational breakeven" point fairly shortly. First, it was around the middle of the year, then it was 3Q.

To make a long story short, there's no way AMD can hit "operational breakeven" for Q2 legitimately, but they probably "would" if they included the fab equipment gain as regular income. I would bet dollars to donuts that this is exactly what AMD will do when it releases its earnings next Thursday, and they'll try to spin this into a great triumph (and maybe hand themselves some extra bonuses and stock options afterwards).

Now I'm sure that at least some, maybe most of those reading this have had their eyes glaze over. Unfortunately, at least some, maybe most of those who will end up writing about this, even the "financial" reporters, will have their eyes glaze over, too.

Unfortunately, that's what some people in certain high positions are counting on, and even more unfortunately, they'll be assisted by some who can see, but are more than happy to help to pull the wool over their own eyes and those of others.

The Big Bias

The very sad fact is that with not many exceptions, there's a bias in favor of AMD in the computer hardware press. Some don't even pretend otherwise. This is mostly because there a bias in favor of AMD in the computer hardware press readership.

Why? The argument is as follows: It is in our best interest to have AMD around to compete against Intel, so we will slant the news in favor of AMD, or repeat whatever they tell us without question or thought, or ignore/minimize the bad news or deceptions.

I'm sure many of you reading this are saying something like, "What's wrong with that?"

Well, what was wrong with Enron doing what it did? What was wrong with Worldcom? What was wrong with all the financial institutions that have gone belly-up or are halfway there lately? They all played the same kind of smoke-and-mirror games we see from Green, and eventually, they all got burned.

What's wrong with that is that when you live by smoke and mirrors, eventually it catches up with you, no matter how complacent those watching are. And people get hurt, hurt badly as a result. Ask the former Enron and WorldCom and Bear Stearns employees and stockholders about their pensions and 401K plans and life savings.

You see, when people find out they can get buy and even prosper with smoke and mirrors rather than real success, they get hooked on them. It's just so much easier and rewarding than doing the hard job, especially if the hard job means firing yourself.

But if it stays all smoke and mirrors, eventually it catches up with you and suddenly blows up in your face, and then all the people who let you get away with it for so long jump up and down and say, "I never dreamed this would happen!"

Sometimes, it's cruel to be kind. You've heard of "enablers," people who allow others to do bad or destructive to themselves or others.

Isn't that what we're really talking about here?


Ed

Message quoted 2 times
Message edited by TechnologyCoordinator on 07-14-2008 at 03:01:49 AM

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TechnologyCoordinator wrote :

Very interesting if true. First the smoke and mirrors with product releases, and now perhaps financials? Intel may be ruthless to competitors, but Intel does show extreme loyalty to its stockholders; an area where AMD has left much to be desired which is evidenced by AMD's sub $5 stock price.

http://www.overclockers.com/tips01360/



You're kidding yourself if you think most companies don't play these kinds of accounting games when they have to take a loss. Once upon a time I worked for Tyco International (a company that definitely knows how to lose money), and this kind of stuff happened all the time. Whenever a company has a acquisition or a contract on which it loses a tremendous amount of money it is usually dubbed a "legacy project" and steps are taken to spread the losses out over several quarters instead of taking a huge hit in the quarter the loss was actually incurred. This is very common for companies that deal with construction projects.

As for adding the revenue gained from the sale of equipment to the gross margin, this makes perfect sense. Every company does this. Depreciation is applied to all company assets so that it can be claimed on the tax return as a capital loss. If assets are sold for a higher price than their depreciated value on the company's asset list then the difference is taken as a profit. Pretty standard stuff.

The author of this article is trying to make it sound like a big conspiracy but really this is nothing unusual.

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Since you asked, I think that is incredibly boring and couldn't care less. :)


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Technology Coordinator this thread is very trollish


back to your bridge!!!!

Where is my sig?
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Someone is foaming at the mouth.

The "press bias" bit is especially good. Apparently, the OP hasn't read a magazine or visited a tech website since 2006.

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TechnologyCoordinator wrote :

Very interesting if true. First the smoke and mirrors with product releases, and now perhaps financials? Intel may be ruthless to competitors, but Intel does show extreme loyalty to its stockholders; an area where AMD has left much to be desired which is evidenced by AMD's sub $5 stock price.

http://www.overclockers.com/tips01360/

Quote :


More Smoke and Mirrors . . .
Ed Stroligo - 7/12/08

As we mentioned yesterday, AMD is writing off another $880 million off its investment in ATI.

What should you make of this?

In all likelihood, AMD has been shopping around the consumer products part of what used to be ATI and found that it isn't going to get much money for it, nowhere near what they paid for it.

So what they did was the accounting equivalent of slashing the price for the division before actually selling it.

Why would they do that? Well, if they hadn't done this, if they sold the division next week or month, they would have to show a huge loss on the sale of the division. So instead, they're taking the loss now, so when the sale happens, it will look like AMD broke even or maybe even "made" money.

Of course, if you have a memory that lasts more than a week and math ability greater than a gnat's, you'll realize that six is one-half dozen of the other, and it is, but many have neither and will get fooled by the smoke and mirrors.

Another game AMD appears ready to play involves the sale of the fabbing equipment from Dresden.

Quick accounting lesson: If you're a business and you buy equipment for the purpose of making money, you are generally allowed to deduct a portion of what you paid for the equipment against your profit/tax each year as you use. This is usually called depreciation, the idea being that you gradually lose the value of the asset as you use it.

Depreciation is only a very rough measurement of this loss, and very often, a business can depreciate the entire cost of an item, but can still sell it and get some money for it. When that happens, the business has a gain on the sale of the property, and must add that gain to their profit/tax.

So, for instance, if AMD bought $1.5 billion of fab equipment for Fab30, depreciated $1.2 billion of that over the course of years, then sold it for $500 million, they would have a gain of $200 million, which is roughly what AMD actually did.


Such an event is perfectly normal and natural. It only becomes funny business when it comes to characterizing the nature of the gain/profit.

Say you own an auto repair shop, and you own a lot of expensive equipment. Making money by using the tools is one thing, making money by selling the tools is quite another. For one thing, once you sell the tools, you aren't going to be making any more money by using them in their business. You had a one-time gain, as opposed to a regular day-in, day-out income.

It is a general, basic accounting principle that you are supposed to separate any one-time gains and losses from your regular, ongoing income/losses. This is to let people easily see how the regular ongoing business is doing.

To put it mildly, AMD has been playing fast and loose with these rules in their public presentations the last couple years, calling ongoing expenses one-time and vice versa, and it looks like they're going to do it big-time again next week.

This report indicates that AMD plans to add the gain from the sale of its Fab30 equipment to its gross margin. That's accountantese for saying that they're going to treat the sale of fab tools like it were the sale of CPUs, treating a one-time gain like it were regular ongoing income.

Why would they want to do that? Well, a few quarters ago, the executives said that they would reach "operational breakeven" point fairly shortly. First, it was around the middle of the year, then it was 3Q.

To make a long story short, there's no way AMD can hit "operational breakeven" for Q2 legitimately, but they probably "would" if they included the fab equipment gain as regular income. I would bet dollars to donuts that this is exactly what AMD will do when it releases its earnings next Thursday, and they'll try to spin this into a great triumph (and maybe hand themselves some extra bonuses and stock options afterwards).

Now I'm sure that at least some, maybe most of those reading this have had their eyes glaze over. Unfortunately, at least some, maybe most of those who will end up writing about this, even the "financial" reporters, will have their eyes glaze over, too.

Unfortunately, that's what some people in certain high positions are counting on, and even more unfortunately, they'll be assisted by some who can see, but are more than happy to help to pull the wool over their own eyes and those of others.

The Big Bias

The very sad fact is that with not many exceptions, there's a bias in favor of AMD in the computer hardware press. Some don't even pretend otherwise. This is mostly because there a bias in favor of AMD in the computer hardware press readership.

Why? The argument is as follows: It is in our best interest to have AMD around to compete against Intel, so we will slant the news in favor of AMD, or repeat whatever they tell us without question or thought, or ignore/minimize the bad news or deceptions.

I'm sure many of you reading this are saying something like, "What's wrong with that?"

Well, what was wrong with Enron doing what it did? What was wrong with Worldcom? What was wrong with all the financial institutions that have gone belly-up or are halfway there lately? They all played the same kind of smoke-and-mirror games we see from Green, and eventually, they all got burned.

What's wrong with that is that when you live by smoke and mirrors, eventually it catches up with you, no matter how complacent those watching are. And people get hurt, hurt badly as a result. Ask the former Enron and WorldCom and Bear Stearns employees and stockholders about their pensions and 401K plans and life savings.

You see, when people find out they can get buy and even prosper with smoke and mirrors rather than real success, they get hooked on them. It's just so much easier and rewarding than doing the hard job, especially if the hard job means firing yourself.

But if it stays all smoke and mirrors, eventually it catches up with you and suddenly blows up in your face, and then all the people who let you get away with it for so long jump up and down and say, "I never dreamed this would happen!"

Sometimes, it's cruel to be kind. You've heard of "enablers," people who allow others to do bad or destructive to themselves or others.

Isn't that what we're really talking about here?


Ed




While normally I treat Ed's articles with the same large grain of salt that I reserve for Fuad's, Theo's or Charley's articles, I do think that that in this case he makes some valid points. Whether anyone listens may be the issue, every bit as much of an issue as was Worldcom or Enron, or Bear Stearns. One can only do 'creative accounting' for so long, then there is nothing left to account for. What does AMD use next quarter? Another write-down on ATI? Seems impractical as ATI may very well be making money. Sell another FAB? How many do they really have left?

When does their next financial report come out? End of this week? Patiently waiting...

I only hope that they don't take ATI down with them....

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Is this for real? AMD...smoke and mirrors? Playing fast and loose surviving off marketing hype and feeding false specs to review writers?

1) AMD has almost no marketing at all
2) they are very very very close mouthed about any technical details or performance comparisons even comparing current AMD hardware against upcoming, let alone comparisons against competition
3)No takes AMD's performance estimates at face value. Not the tech journalists, the hardware manufactures, or any consumer semi-knowledgable in the hardware world.

There have been countless times that AMD has released performance stats, power consumption and overall price/performance ratio only to be ignored, taken out of context or straight out sabotaged.

Intel didn't make a chip that possessed any kind of worthwhile design advancements for a 6-7 year period (1999/2000 being the PIII series launch releasing the P4 in the end of 2000 up until the release of the core 2 series in the end of 2006)

How has Intel always managed to keep such a huge market share regardless of quality, performance, or even progress? Marketing smoke and mirrors and strong-arming vendors.

AMD began stomping intel going alll the way back to the PIII/thunderbird days in 99/2000. Thus began the megahertz war. Throughout which AMD was consistent in being the better chip. While intel went from 1.3ghz - 3.6 ghz. AMD needed only to go from 1.2ghz -2.2ghz in the same time frame, staying on the same socket design, with the only major changes being die shrinks and cache increases with higher clocks and lower power consumption.

Intel's only brief lead was in releasing the 800mhz FSB flavor of the P4, which enjoyed minor performance gains in the 4 or 5 months between it's release and the release of the Athlon 64 line. But the overclocked bartons still stomped the 800mhz fsb p4's.

But what was Intels delightful claim about Netburst....oh yes "netburst will scale to 10ghz" It topped out at...3.6? hmmm seems to be a small margin of error there.

It took a 5.2ghz clocked P4 to tottally out perform a stock AMD 2.6ghz FX-55.

Now lets see, the core 2 chips, are based off the p6 series (pentium - pentium 3) So intel pretty much admits that the 6 year span of netburs was just them putting out crap that would have been better off never existing. But intel prefers to phrase it as "having the performance king laying around for 7 years without knowing it"

Hmm what other smoke and mirror magic has intel worked.

after the conroe was released intel said

There is no reason for an on-die memory controller. They attempted it and came to the conclusion that it created to many problems with little benifit for the increased production cost and in turn an increased cost to the consumer

In reality, they attempted an IMC for what was supposed to follow the PIII series, years of research and development, hundreds of millions spent and it was scrapped after numerous failed production runs. Intel thought it was a good idea 10 years ago. They just couldn't make it work. Still can't make it work, 5 years after AMD did it. So in reality, it's not a good idea until intel can make it too.

The same can be said for native dual-core and quad-core chips. Intel couldn't get 2 cores on a single die so they did two seperate cores in a single package, then upon getting 2 cores on one die, couldn't get 4 cores to work thus the two dual-cores in a single package for their "quad-core" chips. Note that they have been working on the IMC, and native quad core's while telling the world, there's no good reason to do it.

But the best of all. Their biggest con, 64bit? Who needs it?

They had to license the 64bit extenstions from AMD to get in the 64bit game. Once they got there, no one wanted them. Intel is horrible when it comes to 64bit computing.

So three years after the 64bit desktops come out from AMD, 11 years after the first 64bit processor was made by the Alpha team who also worked on the AMD barton's and 939 opterons.

Intel says who needs it?

It had nothing to do with their server chips not being reconized as 64bit compatible despite the claim of it being so. It had nothing to do with Opterons stomping the Xeons. Nothing to do with AMD performace gaining an addition 15-20% in 64bit applications.

They just thought it was silly. Microsoft was silly for making 64bit OS's, all those software developers were just wasting everyones time adding 64bit support to little things like 3D studio max, Cinema 4D, maya and softimage., file compression, video/audio encoding and of course The game developers. All just silly.

Because Core 2 does best in 32bit Xp, just like the PIII chips it's based off of. They will shoddily support 64bit software. So the motherboard makers can sell boards with 4, 8 or 16gig supported RAM capacity. Even though only 2gigs is addressable in 32bit.

Then of course Intel never really seems to get benchmarked in 64bit, despite supporting, thus niether does AMD because how would that be fair? Intel chips are reviewed against completly unbalanced AMD chips. But they'll boast about the $1500 intel quad having a 15-30% performance gain over an $180 AMD dual core, or the $1800 intel quad's 20-30% gain over the $200 AMD quad in real world benches.

But they never seemed to focus to much on AMD's $60 chips having 25-30% better memory performance over the $1500+ intel chips.

The fact that intels synthetic mathmatic benches are so high only because of the huge cache sizes which have no actual performance benifit in real world computing as rendering/encoding/photo editing requires a minimum of 80 or 90 megs cache.

AMD bought ATI 2 years ago, they doubled their company workload, and by golly they have a pair of video cards out that stomp the competitions and they do it at 1/4 - 1/2 the price.

Of course there is going to be an adjustment period. But hey, i guess intel and nvidia are just knocking 25% -60% off their prices after AMD/ATI launches because it's fashionable.




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nice rant iocedmyself.

much more interesting than the original article you posted in reply to :-)

i concur, amd is still kickin ^^


Message edited by nowwhatnapster on 07-14-2008 at 08:16:35 AM
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+1 iocedmyself :)


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:bounce: PREACH IT iocedmyself :bounce:

I agree with you. If AMD spent HALF as much money as INTEL on marketing. Then AMD wouldn't have to relie on "Word of Mouth" to sell their chips (they forget word of mouth spreads all the good and the bad about something).

People who know NOTHING about computers :pfff: know the name INTEL. It's a household name.

And iocedmyself, I could almost here the church organ playing "that song" in the background, AMD fanboys getting worked up and someone who's not Familiar with the Gospel of AMD looking confused.


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wow i had a vision - i saw sugar plums and intel buying ati!
i dreamed of spider renamed scorpion and the all intel gaming platform with nehalem and triple 4870's running 50k 3dmark

it flashed before my eyes when i saw the tech c post - what if? what if amd sold ati who would buy it? intel!

i really hate nvidia! i never forgave them for my x975 systems with out sli


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iocedmyself wrote :

Is this for real? AMD...smoke and mirrors? Playing fast and loose surviving off marketing hype and feeding false specs to review writers?

1) AMD has almost no marketing at all
2) they are very very very close mouthed about any technical details or performance comparisons even comparing current AMD hardware against upcoming, let alone comparisons against competition
3)No takes AMD's performance estimates at face value. Not the tech journalists, the hardware manufactures, or any consumer semi-knowledgable in the hardware world.

There have been countless times that AMD has released performance stats, power consumption and overall price/performance ratio only to be ignored, taken out of context or straight out sabotaged.

Intel didn't make a chip that possessed any kind of worthwhile design advancements for a 6-7 year period (1999/2000 being the PIII series launch releasing the P4 in the end of 2000 up until the release of the core 2 series in the end of 2006)

How has Intel always managed to keep such a huge market share regardless of quality, performance, or even progress? Marketing smoke and mirrors and strong-arming vendors.

AMD began stomping intel going alll the way back to the PIII/thunderbird days in 99/2000. Thus began the megahertz war. Throughout which AMD was consistent in being the better chip. While intel went from 1.3ghz - 3.6 ghz. AMD needed only to go from 1.2ghz -2.2ghz in the same time frame, staying on the same socket design, with the only major changes being die shrinks and cache increases with higher clocks and lower power consumption.

Intel's only brief lead was in releasing the 800mhz FSB flavor of the P4, which enjoyed minor performance gains in the 4 or 5 months between it's release and the release of the Athlon 64 line. But the overclocked bartons still stomped the 800mhz fsb p4's.

But what was Intels delightful claim about Netburst....oh yes "netburst will scale to 10ghz" It topped out at...3.6? hmmm seems to be a small margin of error there.

It took a 5.2ghz clocked P4 to tottally out perform a stock AMD 2.6ghz FX-55.

Now lets see, the core 2 chips, are based off the p6 series (pentium - pentium 3) So intel pretty much admits that the 6 year span of netburs was just them putting out crap that would have been better off never existing. But intel prefers to phrase it as "having the performance king laying around for 7 years without knowing it"

Hmm what other smoke and mirror magic has intel worked.

after the conroe was released intel said

There is no reason for an on-die memory controller. They attempted it and came to the conclusion that it created to many problems with little benifit for the increased production cost and in turn an increased cost to the consumer

In reality, they attempted an IMC for what was supposed to follow the PIII series, years of research and development, hundreds of millions spent and it was scrapped after numerous failed production runs. Intel thought it was a good idea 10 years ago. They just couldn't make it work. Still can't make it work, 5 years after AMD did it. So in reali