HELP FROM COMPETITION, NEW CUSTOMIZED PRODUCTS, ALTERNATE USES FOR EXISTING PRODUCTS ETC. – #101

IT TOOK AMD A FULL SIX YEARS TO COME BACK, AND CAPITALIZE ON ITS FULL POTENTIAL ONCE IT IDENTIFIED WHAT THE SHORT AND LONG TERM PLANS WERE FOR THE BUSINESS. IMPORTANT TO LISA SU TOOK OVER AS CEO. SHE INHERITED A COMPANY THAT WAS, AT BEST, AN INDUSTRY ALSO-RAN, THE REVENUE WAS DOWN 40%, MARKET SHARE WAS CUT IN HALF, AND THE STOCK HAD DROPPED BELOW $2.00, THE LAST TIME I LOOKED IT WAS TRADING AT $54.00. SHE TOOK ONE LOOK AT THE TOTAL BUSINESS AND REALIZED THAT ADM HAD TO GET A HIGHER PERFORMANCE CHIP TO MEET FUTURE REQUIREMENTS NOT ONLY FOR THE GAMING INDUSTRY, BUT TO MEET THE GROWTH IN LARGE PROCESSORS. SHE BROUGHT WITH HER A SIMPLE BUSINESS PHILOSOPHY –YOU CAN’T FOCUS ON LOOKING BACK WHEN IT’S ALL ABOUT WHAT’S NEXT AND THE NEXT BIG THING?  PLUS, THE CHOICES GET HARDER AS YOU KEEP RISING AND DOING BETTER. SHE FOUND, WHILE THEIR PRESENT GPU’S WORKED WELL IN VIDEO GAME CONSOLES (PRESENT MARKETS BEING SERVED) THEY ALSO COULD BE USED IN LARGE DATA CENTERS WHERE THEY WORKED WELL WITH A WIDE VARIETY OF PROCESSORS COMPUTING BIG DATA ANALYSIS. THE THING WE FOUND TO BE A DIFFERENTIATOR WAS FOR AMD’S CAPABILTIY TO PUT TOGETHER THE BEST PROCESSORS FOR DIFFERENT TYPES OF WORKLOADS. LISA AND HER TEAM QUICKLY REALIZED THAT COMPUTERS CAN GET SMARTER AND SMARTER AND DATA CREATION/ PLUS STORAGE WOULD REQUIRE KNOWLEDGE OF WHAT TO DO WITH THIS DATA. BIG INVESTMENT AT AMD IS IN GRAPHIS CAPABILITIES BOTH FOR GAMING AND COMPUTERS DUE THE FACT THAT GRAPHIC DISPLAYS WILL PROVIDE EASE OF UNDERSTANDING VS. A WHOLE SERIES OF NUMBERS. REMEMBER, AS COMPUTERS GET SMARTER AND SMARTER, THEY CREATE DATA THAT HAS TO BE STORED AND HAS TO BE ACCESSIBLE.

AMD JUST WON TWO CONTRACTS FOR SUPERCOMPUTERS (1) OAKRIDGE NATIONAL LABORATORY (2) LAWRENCE LIVERMORE LABORATORY. BOTH SYSTEMS WILL HAVE GPU’S AND CPU’S TO TAKE BIG SETS OF DATA AND DO SOME MORE CALCULATING AND PROVIDE GRAPHICS CAPABILITIES AS THEY ARE DEVELOPED.

THE SMART INTERCONNECTS MAKE THE DIFFERENCE NOW AND WILL BECOME SMALLER AND LESS EXPENSIVE WITH THE NATURAL EVOLVEMENT OF TECHNOLOGY AS WILL THE SUPERCOMPUTER CAPABILITIES THAT WILL TRICKLE DOWN.      – IT COULD TAKE FIVE TO TEN YEARS BEFORE THE TRICKLE DOWN EFFECT WILL TAKE PLACE, THE BENEFITS OF SPEECH RECOGNITION COULD BE USED NOW, BUT THERE WILL HAVE TO BE A WAIT. THE CONSUMER WILL, BENEFIT AT THAT TIME, AND SO WILL AMD. ONE THING OF IMPORTANCE STANDS OUT, AND THAT IS: ON THE SUBJECT OF COVID-19 WHICH, TOUCHES ALL OF US, IT IS AMAZING TO SEE A COMPANY OF 10M PEOPLE, TRANSITION FROM WORK AT THE PLANT/OFFICE TO WORKING AT HOME AND DO SO ON THE FLIP OF A DIME. AMD HAS BEEN WORKING ON VERY SOPHISTICATED PROGRAMS TO TRANSFER DATA FROM REMOTE LOCATIONS. WATCHING THE FACT THAT 2.5 BILLION PEOPLE PLAYED VIDEO GAMES LAST YEAR, SPENDING $152 BILLION. THAT’S CALLED DIVERSIFICATION WITH AMD BENEFITING FROM ALL THE SEGMENTS OF GAMING AND COMPUTING; BEING SPLIT BETWEEN MOBILE GAMES AT 45%, CONSOLES AT 33%, AND COMPUTING AT 22%.

DUE TO REDUNDANCY, AMD’S EXPENSES RUN HIGH IN ENGINEERING AND SUPPLY CHAINS. JUST THINK IF AMD WOULD’T HAVE HAD THEIR CONTINGENCY PLANS IN PLACE, WHAT COULD HAVE HAPPENED TO A GLOBALLY DEPENDENT CUSTOMER BASE. THIS WAS PART OF LISA’S “THINKING BIG FOR AMD”. IF AMD IS GOING TO GROW, IT HAS TO HAVE PLANNING AND A SENSE OF BUILDING A COMPANY THAT CAN WITHSTAND LOTS OF DIFFERENT THINGS RELATED TO THE ENVIRONMENT WE ARE OPERATING IN.

I WON’T BORE YOU WITH BIG NUMBERS, BUT I WILL PROVIDE YOU WITH A DEFINITION OF “EXAFLOP”- a number 1 FOLLOWED BY 18 ZEROS.  1 MILLION I-PHONES ARE NEEDED TO EQUAL ONE EXAFLOP.

 

AMD GOT A BOOST FROM WHEN ITS LARGEST RIVAL “NAVIDIA” ANNOUNCED THE FACT THAT ITS NEW LINE OF SERVERS (DGX)- USE AMD’S PROCESSORS. THE DGX LINE IS A SERVER DESIGNED FOR SPECIALIZED ARTIFICIAL – INTELLIGENCE IN THE DATA CENTER.  THE MOVE DOES NOT CARRY LOTS OF DOLLAR’S IN SALES DUE TO NOT BEING A HIGH VOLUME PRODUCT. HOWEVER, THE MOVE DOES SERVE AS AN IMPORTANT VOTE OF CONFIDENCE FROM A COMPANY NOT NATURALLY INCLINED TO GIVE AMD A BREAK. NAVIDIA AND AMD ARE FIERCE COMPETITORS IN THE DATA CENTER MARKET DOMINATED BY INTEL’S CORP’S

XEON LINE OF PROCESSORS WHICH DOMINATE THE DATA CENTER MARKET FOR CPU’S. AMD IS PRIMARILY VALUED ON ITS ABILITY TO GAIN SHARE FROM INTEL. AMD’S MARKET SHARE IN THE DATA CENTER MARKET WHICH CURRENTLY IS 5.0% – UP FROM 2.9% A YEAR AGO. ANALYSTS PREDICT AN 8% INCREASE IN MARKET SHARE OVER THE NEXT 12-18 MONTHS.  CHIPPING AWAY AT THE DATA CENTER MARKET SHARE USING YOUR OWN PLACEMENT PROCESSOR’S, PLUS NAVIDIA’S, WILL GET RESULTS. MEANWHILE LET’S GET AMD THROUGH THE 3RD/4TH QUARTERS AND THEN SEE IF AMD CAN MAINTAIN ITS 48 TIMES EARNINGS RATING – THE MOST EXPENSIVE STOCK ON THE PHLX SEMICONDUCTOR EXCHANGE.

MANAGEMENT LESSON:

WE SHARED LISA’S SUCCESS WITH YOU WITHOUT REALLY GETTING INTO AN IN-DEPTH ANALYSIS OF THE NUMBERS. IF YOU WANT TO MANAGE YOUR OPERATION PROPERLY, GET TO PUTTING OBJECTIVES, STRATEGIES, WHO WILL DO WHAT- HOW–AND WHEN, DOWN ON A SHEET OF PAPER. THIS WILL GET YOU STARTED.

GOOD LUCK!!!!