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AMD's 4th Quarter, 2006
March 4, 2007
Profit Margins
In a nutshell, AMD gave up profits in return for market share in the fourth quarter of '06.
AMD won the battle for overall x86 market share. However, the company lost the fight for profit margins.
In Q4, there was good news and bad news.
Sales were up.
However, the margins between AMD's sales and what it cost AMD to make those sales narrowed.
In short, profits were down.
Revenue was up.
Revenue, however, bespeaks nothing of profits.
Profit margins were hit and hit hard.
AMD paid for market share with reduced profits.
Market Share
The fourth quarter was also the year end for AMD.
AMD gaining market share for the year should have come as a surprise to no one.
Products based on the competing Core microarchitecture did not start to trickle to market until the Summer of 2006.
It came as more of a surprise, however, when AMD gained market share for the quarter, as well as the year.
Many thought that AMD was taking such a beating in a price war with Intel that AMD was losing market share as well as lowering prices.
In point of fact, AMD did lose market share in the server space.
Intel took back some unit share in servers.
AMD, however, won share in desktop and mobile microprocessors.
Highlights
Highlights for the quarter included:
- AMD began shipping 65nm for revenue in December.
- The acquisition of graphics chipmaker ATI closed on October 24.
- AMD demoed Barcelona, "the industry's first native quad-core x86 server processor".
In spite of AMD server processor shipments being flat, the IT industry expanded Opteron server offerings.
Dell, Sun, HP all announced or introduced new models.
Gateway offered Opterons for the first time.
IBM introduced its "first AMD-based 1P tower server".
These systems constitute a formidable base for upgrading to quad-core Opterons later on.
AMD set records for mobile processors, both in numbers shipped and in sales.
Desktop processors showed strength.
Dell launched "its first AMD-based commercial client desktop and notebook systems".
HP and Samsung introduced desktops.
Sources: 4th Quarter 2006 Press Release and Results