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SAN FRANCISCO -- Meet the new

Advanced Micro Devices

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The troubled chipmaker opened its proverbial kimono Thursday, giving investors the first detailed look at the financial underpinnings and strategic plan that will guide the company through the most significant reorganization in its history.

With the global economy unraveling, and the interestingly timed


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sales warning hours earlier confirming the dismal state of demand for PCs, AMD is re-inventing itself amid a difficult and uncertain business environment.

"It is stormy out there ...we all want to forget October," Chief Financial Officer Bob Rivet told the audience gathered in Sunnyvale, Calif., for its annual analyst day. But he said he was confident the storm would pass, although he held off on updating the company's financial guidance until early next month, when Rivet is scheduled to speak at an investor conference.

Instead, Rivet and the rest of AMD's top brass filled in key gaps about what AMD will look like once it completes the spinoff of its chip manufacturing arm, slated to occur in mid-January.

Besides ceasing to manufacturing its chips in-house, AMD 2.0 will focus on offering value-oriented products for the masses rather than chasing the performance-hungry crowd -- and most importantly, executives stressed, it will be profitable.

"We've collectively had enough of losing money. And we're looking forward to hearing the cash register start ringing," said CEO Dirk Meyer.

AMD has lost more than $5 billion over the past eight quarters. But the manufacturing spinoff and various cuts to operating expenses -- including the most recent layoff of 500 workers -- means that AMD is now officially capable of breaking even with $1.5 billion in quarterly revenue.

The break-even target is not on an operating basis, as AMD has previously qualified it, but on the bottom line. And Rivet said breaking even is the conservative scenario, with net income equivalent to 8% of revenue achievable.

Sustaining that profit, however, will require that AMD keep a tight lid on expenses.

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As a fabless chip vendor, AMD's gross margin will be significantly lower than in its past life. Rivet pegged the company's new gross margin at 40%, but even Rivet's more optimistic scenario of 45% is significantly below the mid-to-high-50% levels it hit only a few years ago.

Shares of AMD finished Thursday's regular trading session up 5%, or 13 cents, $2.70 amid a broad market rally.

AMD also released its new quad-core server processor, dubbed Shanghai on Thursday, and the chipmaker cited strong support for the chip by computer vendors, including


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After AMD's disastrous launch of Barcelona, its previous server chip that suffered from delays and a technical glitch, AMD cited the Shanghai release as proof that it has gotten its act back together.

But AMD appeared to have backed off one of its other key projects: a chip, sometimes referred to as Fusion, that combines the microprocessor and the graphics processor.

Instead of releasing the first Fusion chip in 2010, AMD said it will now wait until 2011. This will allow the company to build Fusion with circuits that measure 32 nanometers, instead of with the 45-nanometer-sized circuits its chips will sport for the next two years.

AMD's Randy Allen said the integrated graphics/microprocessor chip would be a much more compelling product with 32-nanometer circuits.

The new timeline would mean the first example of Fusion appears more than four years after AMD acquired Canadian graphics chipmaker ATI for $5.4 billion. The Fusion project was one of the principle reasons for the controversial deal, which saddled AMD with billions of dollars in debt and nearly drove the company to bankruptcy.

Of course, the traditional graphics accelerator business that AMD acquired with ATI has recently proven one to be the company's best performers, growing revenue 40% year over year in the third quarter, and stealing market share from graphics rival


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AMD also provided details on a major hole in its product lineup -- a processor for the popular new breed of netbooks, which are miniature laptop-like devices designed for Web surfing and email.

Intel cornered the market for these devices with the release of its Atom chip earlier this year.

But AMD said it will enter the market in the first half of 2009 by offering one of its existing microprocessors alongside its graphics and chipset technology to netbook vendors. AMD said its so-called Yukon product will allow computer makers to create netbooks that don't sacrifice performance as much as with Intel's Atom processor.

AMD also said it will have a specially designed processor for netbooks, based on the Bobcat processor that was rumored to have been killed, in 2011.

Netbooks are one of the bright spots in the PC market, as consumers and corporations cut back on spending. But AMD's Rivet said the company believes industrywide unit shipments of PC microprocessors will still manage to increase 4% to 5% in 2009, excluding contributions from the new netbook category.

"We're going to grow better than that," Rivet said, citing the company's new lineup of microprocessor and graphics products.

"I'd rather be in that position going into a storm than not having new products," said Rivet.