AMD in financial peril?

Written by Tim Smalley

March 12, 2007 | 08:04

Tags: #financial #investment #loss #peril #price #share #troubles

Companies: #amd #ati #intel

According to an article on Forbes, AMD has had a pretty heavy time over the past twelve months and has found itself under financial strain after a bloody battle with its arch rival, Intel.

The fierce competition resulted in AMD's share price dropping by over 60 percent over the last year - around $10 billion in shareholder wealth. The reason behind this is because of fears of the company's ability to keep stealing market share from Intel without hurting its profit margins.

In fact, the chip manufacturer warned that it was likely to fall short of its first-quarter revenue expectations of $1.6 to $1.7 billion last week. Analysts expect the trend to continue until the company introduces its next-generation architecture later this year, too.

A lot of the problems stem from AMD's long-term plans for stability and competitiveness with Intel. Intel is also spending heavily on this front too.

The technology industry is an incredibly fast-paced beast, and AMD has spent heavily on long-term plans over the last year. In addition to buying ATI for $5.6 billion, AMD also spent money on increasing its production capacity and potential market share with new fabs.

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