Please report all spam threads, posts and suspicious members. We receive spam notifications and will take immediate action!
Results 1 to 4 of 4

Thread: AMD-ATI Conference Call Transcript (7-24-06)




  1. #1
    Join Date
    May 2005
    Location
    Melbourne, Australia
    Posts
    60

    Default AMD-ATI Conference Call Transcript (7-24-06)

    AMD ATI 7-24-06 Transcript<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p>
    <o:p></o:p>
    Hector Ruiz, AMD, CEO<o:p></o:p>
    David Orton, ATI, CEO<o:p></o:p>
    <o:p></o:p>
    Replay 800-475-6701<o:p></o:p>
    320-365-3844<o:p></o:p>
    Access code: 837580<o:p></o:p>
    <o:p></o:p>
    <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1:place w:st="on"><st1:PlaceName w:st="on">Safe</st1:PlaceName> <st1:PlaceType w:st="on">Harbor</st1:PlaceType></st1:place> Statement<o:p></o:p>
    <o:p></o:p>
    Hector Ruiz:<o:p></o:p>
    Good morning, in fact this is a great morning. Pleased to announce AMD and ati are joining forces, creating a processing powerhouse. Passionately believe this acquisition makes sense for both companies, shareholders, partners, employees and industries. We are both customer focused. <o:p></o:p>
    <o:p></o:p>
    What is happening in the market place right now. Consumer devices are becoming increasing sophisticated, entertainment and information anywhere, anytime. Enterprises are relying upon collaborative. Customers are asking us how they can grow more successfully, gaining simplicity, differentiation, global reach. <o:p></o:p>
    <o:p></o:p>
    Our customers and partners are more excited as to what we can do together in a market long dominated by one company. We have years of experience working together, common culture of technology. Our commitment to ati's customers, employees and <st1:country-region w:st="on"><st1:place w:st="on">Canada</st1:place></st1:country-region> is strong.<o:p></o:p>
    <o:p></o:p>
    We feel confident that company's and cultures will integrate well together. Our products occupy adjacent real estate on a motherboard, we're now more than just neighbors, moving towards a family. Fast growing consumer electronics, innovations to multimedia handhelds, game consoles and htdv. <o:p></o:p>
    <o:p></o:p>
    Accelerate adoption of our technologies in high growth consumer business, will start in 2007.<o:p></o:p>
    <o:p></o:p>
    We believe we will succeed as we enable choice, empower customers to choose what is best for them, insist on fair and open competition.<o:p></o:p>
    <o:p></o:p>
    David Orton:<o:p></o:p>
    Exciting day for ati and our industry. Each day the world of technology is involving, AMD's merger with ati is a transaction centered on growth for employees, customers and partners and industry. <o:p></o:p>
    <o:p></o:p>
    Looking to innovate beyond existing CPU, GPU and chipset boundaries. Growth in enterprise, mobile, and consumer.<o:p></o:p>
    <o:p></o:p>
    Think for a moment about innovation, AMD has great CPUs, we have great GPUs, we've been talking about the ultimate visual experience, looking beyond that, adding to our strength is our chipset business, best supply to solutions into multimedia cellphones and hdtvs. How do we make products better to meet our customers needs. In the future that's just not enough, next phase is to take 2 or more products and integrate, deliver this in 2007 with customer centric products. After that, we'll reinvent what is defined as processing in 2008, data, video and graphics processing, going beyond boundaries of today's products, create a new paradigm. <o:p></o:p>
    <o:p></o:p>
    AMD CFO, Bob<o:p></o:p>
    <o:p></o:p>
    You see how excited Hector and David are today. I believe this will create immediate shareholder value. Although there are<o:p></o:p>
    <o:p></o:p>
    Fundamentally based on creating shareholder value. Accretive to earnings in 2007, meaningfully accretive in 2008 before costs associated with acquisition fees. <o:p></o:p>
    X86 market is about 32billion opportunity, mostly successful in server and consumer, as a result of this transaction, can go after notebook segment, (17billion) also go after consumer segment. <o:p></o:p>
    <o:p></o:p>
    Intend to deploy and accelerate deliver6 of customer centric platforms. Choice completes the strategy, have competition in our DNA, we bring more choice to the market with platforms and best of breed products, address computing and consumer segments. With this transaction better positioned to beat the monopoly. At a 60% gross margin, will lose some ati revenues on Intel platforms, confident upside over <o:p></o:p>
    <o:p></o:p>
    Highly complementary business in adjacent, don't face wide spread duplication. Can achieve significant cost reduce redundant G&A, total savings by 785 million in 2007, and 125 million in 2008 <o:p></o:p>
    <o:p></o:p>
    Studied this opportunity and developed strong integration plans, David Orton, Dirk meyer and myself. <o:p></o:p>
    <o:p></o:p>
    Paying $20.47 per each ATI share, based on July 21<SUP>st</SUP> 2006 of AMD, 80% in cash, remainder in stock.<o:p></o:p>
    <o:p></o:p>
    $4.2 billion in cash, with 57 million AMD shares to ATI shareholders.<o:p></o:p>
    80% in cash, strong position to repay our debt, transaction close in q4 of 2006, following ati shareholder vote. Summary transaction will vote for us and our shareholders. <o:p></o:p>
    <o:p></o:p>
    Hector Ruiz:<o:p></o:p>
    In closing, reemphasize, its all about executing strategy of growth, innovation and choice. Deliver new customer centric platforms and products, fighting against the monopoly. Good for everyone. <o:p></o:p>

  2. #2
    Join Date
    May 2005
    Location
    Melbourne, Australia
    Posts
    60

    Default Re: AMD-ATI Conference Call Transcript (7-24-06)

    (Apologies - the copy and paste function distorts the paragraphs somewhat in here)


    Q&A Session:

    Q: MSDW, 3 quick questions, 1) walk us through synergies are from where 2) talk about long term mfg plans here.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p>
    A: as we tried to highlight, this is about growth, bulk of synergies is about growing the business, growing market share in MPU space, as I just mentioned, one percent additional market share equates to 300 million, put a 60% gross margin on it and it's a lot of margin. There is overlap in redundancy of cost, equates to 75 million in 2007, expanding to 125 million in 2008. mostly in the sg&a, pickup in margin and R&D, just redundant efforts on platform development. <o:p></o:p>
    <o:p></o:p>
    On the mfg side, strategy, flexible mfg, trying to optimize use of cash and make product, with ati product, we now have immediately relationships with top foundries in the world, chartered semiconductor, already shipping product into the market place in MPU, with ATI's strong relationships with TSMC and UMC, we now have 3 of the who is who of the foundry industry. We view that as a very strong capability we will take advantage over. It really opens up a broad array options, with 3 of the most outstanding partners. Having expanded our capacity to 300mm facilities in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1:place w:st="on">Europe</st1:place> and US, we will have a broad array of options to maximize our mfg strategy.<o:p></o:p>
    <o:p></o:p>
    Q: what % came from core logic came from AMD?<o:p></o:p>
    A: between 30 and 40%<o:p></o:p>
    <o:p></o:p>
    Q: GMP Securities, talked to Intel about them acquiring you as well.<o:p></o:p>
    A: we have not, we are very committed to the AMD relationship.<o:p></o:p>
    <o:p></o:p>
    Q: Intel bus license, can some of the terms be broken<o:p></o:p>
    A: will take that off line, we continue to ship, the acquisition doesn't close until q4, so we're going to continue business as is until that is done. <o:p></o:p>
    <o:p></o:p>
    Q: Sanford Bernstein, part of your strategy was an anti-Intel, anti platform, if customer wants NVDA in 2008, will they have that option, what does that mean for your Nvidia relationship. <o:p></o:p>
    A: this is totally different from what our competitor is doing in platforms, one of the beauty of ati and David Orton, we're very committed that our customers have an opportunity to choose best of breed products, our desire to join forces and create platforms, make sure customers always have opportunity to create solutions that are best for them. In whole area of openness is our Torrenza strategy, in that strategy we took our Opteron ecosystems, and opened it up into any player, that would like to use that platform to offered the opportunity to let customers to whatever they want. In a similar manner, we are working with ati to integrate silicon where it makes sense, but continue openness. If customer wants to buy products from someone else, we applaud that. <o:p></o:p>
    <o:p></o:p>
    A: further amplify that, we're going ton continue to open up interfaces between components to a broad array of partners, and therefore relative to GPU, expect ati biz to compete on AMD platforms with NVDA. We welcome that and think its stronger for us. Opportunities for us to offer better turnkey solutions by working hand in hand with our ati family. We will encourage other players to work in our ecosystem. <o:p></o:p>
    <o:p></o:p>
    Q: you mentioned a couple times of creating shareholder value right out of the gate, given the premium you pay, how do you define shareholder, how much incremental MPU revenue from this deal, how to get comfortable with this price. <o:p></o:p>
    A: think of it this way, in the near term, we think it's a $100 million type opportunity, net of reduction, assuming fairly aggressive Intel loss. That number expands to hundreds of millions in 2008, to billions beyond that. 1 share in MPU, works out to 300 million with 60% markets. In commercial and notebook, where we are underrepresented. <o:p></o:p>
    <o:p></o:p>
    Q: on the deal mechanics, any material conditions for AMD to walk away, pertaining to stock price as well.<o:p></o:p>
    A: we're not prepared to talk about that on this call.<o:p></o:p>
    <o:p></o:p>
    Q: in the press release, roadmap for innovating MPUs and GPUs, silicon specific platforms, talking about own die innovation or more of a platform approach. <o:p></o:p>
    A: no question as we look towards ever finer mfg geometries, integrating CPU and GPU dies in some sub-segments there are opportunities from a basic ip and technology, as we think of techniques from CPUs and GPUs, in the long term we see the opportunity to leverage both approaches on an application specific basis. Not just integrating preexisting CPU and GPU on a die, how we leverage best of both companies to solve customers problems. <o:p></o:p>
    <o:p></o:p>
    Q: expect there to be any layoffs in any company 2) does ati have any debt that AMD is acquiring<o:p></o:p>
    A: this acquisition is about growth, creating value, not destroying value, as we know there are some overlap in duplication of effort in area, particularly in sg&a, if you look at the number of cost synergies, for an acquisition of this size, 75 million in 2007, 125 million in 2008, fairly modest. Those will be fairly modest changes in that area, I don't think the work layoff can apply in this particularly context <o:p></o:p>
    Ati only has 40 million of debt with a facility they have, we're not picking up any additional debt <o:p></o:p>
    per so on this transaction.<o:p></o:p>
    <o:p></o:p>
    Q: Did you expect to see layoffs?<o:p></o:p>
    A: I did not expect to see layoffs<o:p></o:p>
    <o:p></o:p>
    Q: as far as ATI business goes, maintaining that as fabless, not bringing that in-house<o:p></o:p>
    A: we think flexible mfg is very strong, great relationships with chartered, TSMC and UMC, expect to continue that near term<o:p></o:p>
    <o:p></o:p>
    Q: ati-Intel chipset business, does that shut down pretty quickly?<o:p></o:p>
    A: if customers are excited by using Intel, we are not going to block or prohibit ati products from anyone.<o:p></o:p>
    <o:p></o:p>
    Q: why the increase in cash, why not all stock<o:p></o:p>
    A: we're very bullish from doing a debt-cash oriented deal, we don't like where our stock is right now, its based on confidence, at the starting gate, lots of opportunities, this takes us back up from debt to capital, but we think we can knock it back down to our target. <o:p></o:p>
    <o:p></o:p>
    Q: clarification, your competitors approach to platforms, increase its part of the Bill of Materials, help me reconcile how your platform is along the same path, bodes well for some of your chipset partners, such as Nvidia, which has a substantial portion of AMD share. <o:p></o:p>
    A: the difference, we will keep our interface standards open. Our competitor's mgmt strategy requires use of Intel chipsets and Intel network interface controller in order to implement their platform standard. We're going to keep it open and the software that sits on top of the hardware in order to maintain and participate in our ecosystem. <o:p></o:p>
    Last edited by Ricochet; 07-25-2006 at 09:06 AM.

  3. #3
    Join Date
    May 2005
    Location
    Melbourne, Australia
    Posts
    60

    Default Re: AMD-ATI Conference Call Transcript (7-24-06)

    Q: if there's no push for chipset or CPU?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p>
    A: practicality at the end of day, delivering a platform that works, its hard to work with 4 different companies to bring a solution to market, easier to work with a single company. <o:p></o:p>
    If you look at the market and where its heading, opportunity to create new platforms, new CPUs and chipsets, opportunity for AMD to get out in front of the market, <o:p></o:p>
    <o:p></o:p>
    Q: Lehman, background color as you approached the framework of this transaction, frame the revenue that one should understand for Nvidia for ati that is Intel related <o:p></o:p>
    We have been thinking of this strategy for another years, we've developed an intimate relationship with ecosystem partners, under our analysis that ATI is the best partner for us in growth and choice. The cultures of these two companies are aligned, passion for developing customer driven solutions is really, really strong. In terms of Intel business, as we stated before, in our remarks, we're making the prudent assumptions that business will disappear, I think its prudent to plan for that, if there is any platform where ati product is doing well for the customer, we would expect to continue that. <o:p></o:p>
    <o:p></o:p>
    Think of it this way, today, within ATI world, only Intel-revenue stream, is in range of 80-100 million per quarter. We'll continue to support that business until its not required by the customer base. <o:p></o:p>
    <o:p></o:p>
    Also with regards to capex, with incremental debt, will that alter your prior capex plans or the pace with which you will execute your prior announced plan. <o:p></o:p>
    We will continue with the foundry model, we now have all the who's who of the foundry industry.<o:p></o:p>
    Capex of 2.5 billion for last week for 2007 is unchanged. No additional capex requirement.<o:p></o:p>
    A: <o:p></o:p>
    <o:p></o:p>
    Q: ZDNet, question about reference to these customer centric platforms or integrations of CPUs and GPUs targeting specific application, indicates down the line, where there is a more diminished role for the PC, replaced by more specific devices, for applications the PCs used to do. A preparation for the company, diminished role for PCs <o:p></o:p>
    A: we see pc as a very central role, if you think about processing technologies involved, general purpose processors in CPUs and specialized in form of GPUs, built on non-general purpose hardware. We need to integrate both processes, best analogy is 10-15 years ago fpu were built on a separate component from CPU, years ago, industry integrated those together. Over time we expect to see the same thing happen in processing elements, further optimize pc and bring pc technology to devices that x86 and software is valuable. <o:p></o:p>
    <o:p></o:p>
    When you think about a pc, I think your blending a pc to be this playing platform, the opportunity is to take the pc and create more customer specific roles for the pc. One platform that might be more graphic centric, more data centric, more media centric. In addition, expand into new markets, with combination of our technology, areas between pc and consumer electronics area. And even to expand in consumer electronics market itself. <o:p></o:p>
    <o:p></o:p>
    Q: Customers were asking for this, what were customers asking for and benefits?<o:p></o:p>
    A: first of all for a number of years, talking to customers, our biggest immediate opportunity for growth in mobility and commercial spaces, customers wanted us to be very strong player, strong in consumer and server, customers wanted us to play a bigger role in the ecosystems of those products and our ability to own and control ip and platforms and chipsets, etc., became more critical in this commercial space where we were very small participants. One of the things they would insist, we need you to be apart of commercial ecosystem. <o:p></o:p>
    <o:p></o:p>
    Q: hearing that your not necessarily bringing in ati in-house, is mfg substrate a limiting factor in this<o:p></o:p>
    A: would not allow a component of mfg process to dictate our strategy, definitely brining in ati in-house as a strategy, we already have in-house capability to build on a foundry basis. We're building geode at TSMC, which is not along the mainstream on our mfg. This is a real integration of ip, technologies, business plans, happens to have a different mfg base from a mainstream mfg base. It provides a very flexible mfg strategy for fables and idm. <o:p></o:p>
    <o:p></o:p>
    Q: think of design and distribution for AMD, quantitatively, versus current expectations, gross margins for ATI, intention as a combined entity, those ati margins will be better. <o:p></o:p>
    A: target of 38-40% internally, expand our consumer electronics business is a 50%+ margin business, in-line with AMD<o:p></o:p>
    On our website, an investor relation slide deck, will answer a lot of questions, we've actually modeled the new financial model, in that financial model, not changing operating income guidance, targeting 18-24%, change in how we get there, integrating ati, lower margins with GPU and chipset, gross margin spread from 51 to 56, but we'll pick up efficiencies in sg&a in order to get us to 18-24%. <o:p></o:p>
    <o:p></o:p>
    Q: still commitment to <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1:country-region w:st="on"><st1:place w:st="on">Canada</st1:place></st1:country-region>, keeping operations there still?<o:p></o:p>
    A: absolutely, we have a strategy of centers of excellence around the world, we expect to continue a strong center of excellence in <st1:City w:st="on"><st1:place w:st="on">Toronto</st1:place></st1:City>. So we're very committed and very excited, strategy of growth and creating value. <o:p></o:p>
    <o:p></o:p>
    Q: target for mix of your business, consumer oriented mix, 2, 3, 5 years out.<o:p></o:p>
    A: not prepared to talk publicly, but pretty clear that you have small business with incredibly high growth rates.<o:p></o:p>
    <o:p></o:p>
    Q: elaborate on strategy with Nvidia<o:p></o:p>
    A: first of all, as we've stated, we're really going to move towards a philosophy of opening up so that best of breed players can play. Great relationship with NVDA, expect that to continue, one very important thing, this transaction is about expanding the market, as a result of the complementary alliance between these 2 companies. Emphasis on process technology. <o:p></o:p>
    <o:p></o:p>
    <o:p></o:p>
    Q: product announcements maintain the same schedule for ATI<o:p></o:p>
    A: our current roadmaps over next 6 months, we have to deliver those, whether r600, or continued chipset on AMD platforms, ramping some products in Intel as well. Mid-term to leverage process technologies, enable us to create better products, GPUs, tv processors, handhelds. Roadmap changes, opportunity to accelerate them. <o:p></o:p>

  4. #4
    Join Date
    May 2005
    Location
    Melbourne, Australia
    Posts
    60

    Default Re: AMD-ATI Conference Call Transcript (7-24-06)

    Q: wondering to what degree impact of GPU and windows vista with you guys talking to each other, potential for OEM skews from GPU to CPUs, talk about if this in any way gives you a leapfrog with respect to GPUs. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p>
    A: this is a strategy in the making for a number of years, the opportunity we saw, started long before vista, knowledge that visual communications would play a much bigger role in what we were doing in the future, the technology combination of AMD and ati allows us to deliver value to vista Is unequalled, goes beyond vista. As Microsoft said, they're looking forward to results in making vista even more exciting. We're also encouraged with trends and model, as you mentioned on vista, dollar movements from CPU to GPUs in the short term. Take some technologies in GPUs, pull them back architecturally into CPUs, delivering technologies around GGPUs. <o:p></o:p>
    <o:p></o:p>
    Q: on mfg, grab some more margins by moving into foundries, barriers at the margin of taking a GPU and putting it into foundry<o:p></o:p>
    A: in the near term, the experience that ati has with foundries, its hard to duplicate, not just flipping a switch and moving it somewhere else, it has taken years, mfg technology, we are on a different mainstream mfg, our own mfg is focused on high performance and SOI (Silicon on Insulator) <o:p></o:p>
    <o:p></o:p>
    Q: none of the synergies have to do with moving mfg in-house<o:p></o:p>
    A: no, expect to be continued to be challenged to be met with needs by MPU customers<o:p></o:p>
    <o:p></o:p>
    Q: in near term and intermediate, 1-2 years, internal capacity to purely benefit our MPU, no plan to increase in-source ati products, outside of that time frame, rather we think of ati products that are available to make sure over time to make sure we are fully 100% capacity utilized. <o:p></o:p>
    A: <o:p></o:p>
    <o:p></o:p>
    Q: on the Intel logic chipset, ati has been partnering with Intel, does that Intel business gets pulled in immediately<o:p></o:p>
    A: we're going to focus on the customers, we have OEM design wins, going to continue to support those OEMs, we've been watching the chipset, common southbridge between Intel and ATI, our inventory position on chipset is quite lean today and see no issue today. <o:p></o:p>
    <o:p></o:p>
    On the Intel business, it is fairly low gross margin business, we've modeled, and you will model it will go away, its not real juicy gm business.<o:p></o:p>

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •