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AMD shares up after licensing moves and Radeon success

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It seems that AMD’s recent licensing moves and the press that Zen has been getting has given investors more confidence in the company. On Friday this confidence pushed AMD’s share price by almost 10% at $6.18 (the 52 week high) of this writing AMD’s share price has dropped some, but is still up by a little more than 5% ($6.14). Some have seen this as proof that AMD is going to have a comeback soon and that Intel should be very worried.

So, should Intel be worried about AMD? In reality, not really. AMD is making a few moves that will make them much more profitable over the next couple of years, but most of those are not CPU sales related. They are firmly in the licensing arena or relate to the Radeon Graphics BU. AMD has taken a pretty big hit by not having a new CPU/APU for almost two years. To the consumer market this bad, very bad. If there is nothing to show progress, then the consumer switches to alternatives. Even some hardcore AMD fans have complained about this fact while they eagerly await their new Zen CPUs.
AMD’s gains in the console market are not a concern to Intel as Intel is not looking to dump a CPU into a console. This arena is still being half-heartedly fought by NVIDIA although here is little doubt that AMD’s APUs are trouncing them at this time. Still it is good news for AMD, if they can squeeze a little more profit from the per unit costs then they are right now.

For those that talk of looming deals with HP, Lenovo and other server manufacturers we have this bit of advice. The consumer (big businesses) still have to buy them. Yes, they might be able to offer them at a slightly lower price, but if they do not scale as well then the cost of buying cheaper is lost. The CPU is not the major cost of running a server. In reality it is only going to be a fraction of what you are paying for. If an AMD CPU can only handle 80% of the load it is not likely that the cost will be 80% of the same Intel server. It would need to be more than 80% less or the buyer loses money. Needing an extra server means more power, cooling etc.

AMD has come a long way, their Radeon GPUs are performing well and Zen has great potential that has yet to be seen in the real world. Banking on that product would not be a wise move for AMD right now. This is why they are looking to expand their licensing deals and partnerships. This move increases revenue without increasing expenditures. AMD has bought themselves time and room to focus on getting a compelling CPU product to the market. It is a start, but they are not out of the woods yet.

Sean Kalinich

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