AMD: tech's longest running roller coaster
On March 21, 1983, AMD went public. Adjusted for splits, the stock closed at $9.00 that day. Today, shares of AMD closed at $7.95. That means if you invested $10,000.00 in AMD's IPO, today you'd have $8,833.33. Adjusted for 25 years of inflation, that would be about a buck and a half.
Just to calibrate that, the same investment in Intel would have gotten you about a half a million dollars, Texas Instruments about $150,000, both the NASDAQ and S&P 500 about $100,000; even National Semiconductor and LSI beat AMD, although not by much.
Of course, some investors have figured out that you can make a fortune playing the AMD roller coaster. Except for the tech bubble and a brief spike two years ago, the stock has traded in a relatively narrow range. Seems like a nerve-wracking way to invest, but I know people who swear by it.
To be sure, chips are a tough business. Designing complex microprocessors with 100 million transistors and building billion dollar fabs to manufacture them is the pinnacle of the high-tech world. What AMD does requires the toughest of the tough.
(Credit:
Advanced Micro Devices, Inc. )
Still, performing technical miracles year in and year out for a quarter of a century, with only erratic profitability and thousands of disappointed shareholders to show for it, has to be demoralizing. Sure, it's great for consumers, but long-time executives and investors must be suffering from chronic depression by now.
Speaking of executives, founder Jerry Sanders played second-source fiddle to Intel for two decades. For the past five years it's been Hector Ruiz's turn at the helm. The two executives couldn't be more different: Sanders was a notoriously egotistical salesman, while Ruiz is an even-keeled technologist.
About halfway through his tenure as CEO, Ruiz was beginning to look like the guy who could actually break the company out of its bipolar existence. Just two years ago, AMD had managed its second consecutive year of profitability and the stock was trading near record levels.
Then, right on schedule, the roller coaster began its plunge. Amidst chronic execution problems, key product delays, and a staggering $2 billion in losses over the past four quarters, analysts are wondering when the stock will bottom out. For those who play the roller coaster for a living, the bigger question is how long will it take to bounce back?
Only one thing's for sure. Intel may be the biggest one-hit wonder of all time, but it's one hell-of-a hit and nobody can beat the chip giant at its own game. So, as long as AMD continues to slug it out with its next-door neighbor, rest assured: there will be good years and there will be bad years.
Steve Tobak is managing partner of Invisor Consulting LLC. He is a member of the CNET Blog Network, and is not an employee of CNET. Disclosure. 
having 2-3 chip makers battle it out is a win-win for consumers. faster speeds and cheaper processors.
if amd folds, it is trouble for consumers.
Also - we all know that AMD processors are the better and more efficient.
keep the race going!!
I hope AMD can pull something out off their ass because ATI sucks now and so does amd.
- by tech-fan December 18, 2007 11:18 AM PST
- The computing world is growing beyond the PC. More people are moving to
- Like this Reply to this comment
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(5 Comments)cellphones as their mobile computing platform. Game consoles are becoming
the high end gaming computing platform. Applications are growing toward being
web based. All these new solutions are and will increase pressure on the PC as
the computing platform of choice. In the total world of processors Intel is not significant.
In the PC world AMD is somewhere around 20%. AMD going away would cause price
increase for PCs but not that much.
Nice discussion here: http://www.overclockers.com/tips01146/