When The Chips Are Down

Last month, Audit Integrity released a report about 10 companies that have
the highest likelihood of declaring bankruptcy. One of the names in this list
was Advanced Micro Devices (AMD).

Earlier this month at an industry event, quite a few people were discussing
news that the company has filed for bankruptcy. Back on the fact that AMD has
not been able to record profits for 11 quarters, this was not difficult to
digest.

On closer inspection, what emerged was that it was not AMD but one of its
hived off division, Spansion, a flash memory provider, that filed for
reorganization under Chapter 11 of the US Bankruptcy Code.

But still this fact did not make lessen the zest of conversations amongst
interested parties at the event. Instead, the talk then veered to when AMD would
finally go under the hammer. What is surprising is that while most of the group
anticipated this eventuality to come to pass soon, they were not very happy it.

For a long time now, talk has been going around about the fiscal distress
that AMD is enduring. Part of it is tied to its $5 billion debt figure.

To offset some of this loss, AMD had even spun off its manufacturing
operations to a company called Global Foundries, where it had a stake. Before
that it acquired graphics chip company ATI Technologies, which is around the
same time that the naysayers stared predicting its downfall. Now analysts are
stating that the company will continue to post losses till 2010.

This is despite the fact that the company has some well performing products
like Athlon and ATI's Radeon graphics chip. Earlier this year, it strove to
bring out its Istanbul Operton chipset into the market, months before its
November 2009 launch date.

In India, the company has been trying its best to reach out to the a wider
customer base with an ongoing channel outreach program where it is touching base
with partners in the hinterlands and trying to get their buy in for AMD's
products.

And yet, these rumors persist. Incidentally, a look at various technology
forums show that there are a lot of users out there who are rooting for AMD,
only to ensure there is some competition in the market to Intel.

AMD has always been the image of David fighting Goliath, which often brings
out the sympathies of most people sitting on the fence. This is probably why it
has a lot of support from the channel and customers alike.

But it is fairly obvious that the company is fighting a very inclined uphill
battle with a huge debt burden on their back. How they will be able to prove the
naysayers wrong, is a feat worth watching out for.

VINITA BHATIA


vinitavs@cybermedia.co.in