Your argument for the downfall of AMD is specious. 3dfx was a one horse show. Early 3d graphic houses where 3dfx, ATI, nVidia, Matrox and Via S series graphics. All today are in the market but AMD is the most diversified player followed by nVidia and the rest are irrelevant. The problem with AMD is they overpaid by 2 billion for ATI. And they are still paying that debt. However AMD like Intel are suffering from declining x86 sales just as nVidia is seeing a shrinkin of the discrete graphics market due to both the decline in x86 sales as well as displacement from Sandy Bridge and AMD Fusion APU's. x86 is in decline for two reasons. The tablet and smart phones are grabbing market share and the slow economy is not permitting the replacement or new purchase of desktops or laptops. This is primarily in the consumer pc market as well as the business use market as well. A Tablet or smart phone is fine for communications and entertainment but you can not use it do do work. The console business for Microsoft, Nintendo and Sony is worth 500 million per year at least. Just take current console sales and times that by $75 and take 40% of that for margin and that would be a pretty good estimate for profit. That is a NEW revenue stream. Currently AMD is loosing just less than that; so the console business will bring them back into profitability. Current pricing does not take this into consideration. While analysts may be aware of this future revenue stream, the market is not reacting to it as is is not yet a rumour nor is it news. When AMD begins to announce the releases for the console market, the stock will bounce as the short sellers will cover. AMD is also not standing still in the x86 low power mobile arena. Rory Read is also NOT responsible for the mistep into the tablet ecosystem; that failure was Dirk Meyer, and the board tookk his head. Read was brought on-board and AMD is now releasing low power products. The excusrion into the low power server market wih the SeaMicro acquisition is also a very savvy move. AMD is also a company the market hates but the consumer should love as without them Intel would be a monster. We are also in a very slow economy and folks are resisting the purchase of new desktop or laptop boxes. As to what will happen with AMD? Well I think that $2.00 a share is a fine entry point considering that the console revenue has NOT been priced in. As the short interest in AMD is around 25% the reaction to this revenue stream announcement could be a very good bounce. Will AMD fail? Of course not. The sole supplier of 4 console builders is a very attractive acquisition. I think that AMD is remaking itself into a true APU builder. The discrete gpu's days are numbered. This is especially true for the 80% of the gpu market.
The console business for Microsoft, Nintendo and Sony is worth 500 million per year at least. Just take current console sales and times that by $75 and take 40% of that for margin and that would be a pretty good estimate for profit. That is a NEW revenue stream. Currently AMD is loosing just less than that; so the console business will bring them back into profitability. Current pricing does not take this into consideration. While analysts may be aware of this future revenue stream, the market is not reacting to it as is is not yet a rumour nor is it news. When AMD begins to announce the releases for the console market, the stock will bounce as the short sellers will cover. AMD is also not standing still in the x86 low power mobile arena. There are 2 reasons for declining sales. Everyone is enamored by the tablet and smartphones. While there may be apps for both, there is no real SOFTWARE. We are also in a very slow economy and folks are resisting the purchase of new desktop or laptop boxes.
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