AMD to stockholders: Everything will be all right

During its annual shareholder meeting in Austin, Texas this morning, AMD CEO Hector Ruiz attempted to reassure shareholders that his company is on the right track. Ruiz opened by stressing how disappointed he is with last year's financial results, but he quickly went on to paint a more optimistic picture of AMD's future:

In looking back, 2007 was a difficult year of transition for AMD. And I speak for every AMD employee when I say that I could not be more disappointed with our financial results. The Barcelona processor delay really hurt. But that is behind us. As a matter of fact, we've learned some lessons very important to us. In our materially cyclical industry, we have learned to anticipate and prepare for the inevitable downturn. And that's exactly what we did. We have a healthy cash balance sheet approaching $2 billion, and we have some financial cushioning in place if the macro-economic environment continues to disappoint, particularly in North America.

Ruiz reiterated that AMD is on track to become operationally profitable again in the second half of the year, and he called 2008 "a year of opportunity." He also explained that the company is taking steps to avoid a repeat of the past few quarters:

While our short-term goal is to achieve operational profitability in the second half of this year, our long-term goal is to achieve consistent profitability in good times and bad times. To that end, we are re-architecting the business so that our financial success is not invariably dependent on continuous component performance and leadership.

In order to keep AMD's head above the water, Ruiz said, "[we will be] reducing our break-even point by several hundred million dollars so that we will be profitable on our current revenue stream." In other words, if the previously announced job cuts and restructuring work out, AMD may not need to double its market share to be profitable again.

Speaking of restructuring, Ruiz also had a little more to say about AMD's long-awaited "asset smart" strategy. As part of the strategy, Ruiz said, AMD will "deploy [its] manufacturing assets to most cost-effectively stay at the leading edge and deliver customer value." While vague, the statement further hints that AMD might spin off its manufacturing business as a separate entity.

Did Ruiz's promises successfully convince stockholders? That's hard to say: the only question after his monologue came from an elderly Austin resident, who talked for several minutes in a slow, baritone drawl about golf tournaments.

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