AMD needs some cash, so it’s taking out a $2b loan:
The first quarter was a rough one for the chipmaker. AMD followed up its 2006 revenue and market share gains by posting a $600 million loss for the quarter. More alarmingly, it had only $1.2 billion in cash on hand, an amount that is just twice the company’s minimal acceptable level.
An ongoing price war with Intel is hurting AMD in the short term, and its first quarter results demonstrate how deeply the price cuts affected its bottom line. Unfortunately for AMD and its investors, it looks like things won’t change much in the short term. Two weeks ago, the company announced more price cuts in an attempt to fend off the Core 2 Duo.
The Ars article notes that AMD is hardly out of the game. They have some impressive products in the pipeline, including quad-core cpus (“Barcelona”) and new GPU technology derived from its purchase of ATI. And it’s absolutely better for the consumer to have AMD be a healthy competitor to Intel than a weak foe; the astounding innovations of the Core Duo platform (derived from Intel’s Israel-based design team) are arguably solely the result of competitive pressure. I for one hope that AMD’s gamble pays off and they can hold it together long enough to deliver solid computing options for both the average consumer and enthusiast.
UPDATE: Ouch. Worth keeping in mind that market share is intrinsically volatile, whereas prices tend to go in one direction: down.