AMD 2008 Annual Report Download - page 4

Commission will render a final ruling in the Intel antitrust matter in 2009. In the United States, both the U.S.
Federal Trade Commission and the New York Attorney General’s Office have very active formal antitrust
investigations into Intel’s business practices. We believe that 2009 will be an important year for us and the industry
as leading competition authorities continue to act to address Intel’s illegal abuses of monopoly power; illegal abuses
that clearly subvert competition, hurt consumers, and slow the pace of innovation.
2008 Financial Results
The credit market crisis and related other macro-economic conditions affecting the global economy challenged us
greatly in 2008. In particular, during the fourth quarter of 2008, which is typically our strongest quarter of the
fiscal year, end user demand for PCs and servers decreased. In turn, our customers sharply reduced orders for our
products in order to balance their inventory levels to address the decline in end-customer demand. We believe
this state of weak end-customer demand will continue.
Although 2008 net revenue was approximately flat compared to 2007, net revenue for the fourth quarter of 2008
decreased 35 percent compared to the third quarter of 2008 and 33 percent compared to the fourth quarter of
2007 due primarily to deteriorating global economic environment.
In light of the current economic environment, we are focused on preserving and generating cash while protecting
our core investments, and of course, continuing to serve our customers’ needs. Our primary goals are 1) cash
management, 2) investment in the future and 3) improving our financial performance. Despite the uncertainty of
the market, we believe our product line-up is strong and we look forward to achieving our goal to exit 2009 free
cash-flow positive*.
2009: A New Economic Reality that Plays to AMD’s Strengths
2009 marks AMD’s 40th anniversary as a semiconductor industry innovator that designs and markets products
and platforms to enable the next-generation of applications at home, work and play. With the close of our Asset
Smart transaction, we continue transforming AMD into a stronger, more agile innovation engine. I am confident
that with our new operating model, strong roadmap and portfolio of world-class customers, AMD is primed for
long-term success and growth.
Meanwhile, the world is going through an unprecedented shift to value—one that is unlikely to change in the
foreseeable future. We are well positioned to benefit because, in our business, ‘when you think value, you think
AMD.’ In the markets we serve, the definition of value is changing—to one grounded in real-world experiences
and applications that define them. The user experience is no longer defined by the raw speed of the processor, but
by how well the overall system performs on the most relevant workloads and usage models.
Platforms: Providing a Superior User Experience
The era of components is ending and the future is about platforms. We are creating platforms that combine our unique
technology assets to deliver a superior user experience. For example, AMD recently announced a new notebook
platform for the ultrathin market in response to the growing interest in netbooks. Although today’s users want mobility,
many do not want to sacrifice the full-feature PC experience. AMD collaborated with HP to develop a notebook
platform for the ultrathin market that offers a feature-rich experience at an affordable price. The HP Pavilion dv2
Entertainment Notebook PC was launched to industry accolades and received a CES Best of Show from Laptop
Magazine earlier this year. In 2009, we plan to double the number of platforms we deliver year-over-year.
Raising the Bar in Graphics
Regardless of the form factor, today’s user demands an experience that is visually-rich and media intensive. AMD is
focused on delivering the world’s leading graphics solutions for PCs, workstations and game consoles. Last year,
we changed the rules of the game in graphics and captured the hearts of the enthusiast community. By combining
two ATI Radeon HD 4800 series GPUs with an advanced cross-GPU connection, we created a more scalable
*Defined as cash flow from operations less capital expenditures.