A Meditation on Value
Shed Full of Wood and AMD's Houdini Maneuver
By Roger L. Kay
Yesterday, as the market was tanking yet again and the very foundations of capitalism were
shaking, I found myself thinking about the nature of value. The weather has turned chilly here in
New England, and the leaves, golden. I took a few minutes to haul up a four or five armloads of
wood to the house in anticipation of a night near the frost line. The chunks were bone dry after
nearly two years in the shed, but still heavy because red oak is particularly dense and full of
heating potential. I cut and split that wood myself from a tree that fell in a storm. As I stood in
the shed, looking at a winter’s worth of wood, I thought about the fact that my family would be
warm, even if foreign sources of petroleum get more squirrely than they already are. I’m not as
young as I once was, but I can still split and carry wood, a value in itself. And with the day being
calm, bright, and almost warm at midday, I was happy to be healthy, at peace, and enjoying a
degree of energy security. Some of that value came from nature, which supplied the tree, and
from me, who anticipated the energy issue back in the Carter years, when I began burning wood
as well as gas. Forethought and work as well figured into it, because then I had to put my policy
into action by building the shed, by creating the slate and gravel steps up to the house so I
wouldn’t slip in winter on an icy slope, by fashioning the wood door (a sort of airlock for getting
wood into the house without making a mess), by harvesting the particular logs of this season,
and by putting them up so they’d be dry in time. And finally, by carrying them up. Raw
commodity value, forethought, and labor went into that value. You’d have to look awfully hard at
all those derivative securities to see where the value lies.
Meanwhile, a propos the work at hand, good on AMD for putting together the right partnership
with various financing groups in Abu Dhabi. By tying together its own process technology
development assets, its world-class manufacturing in Dresden, and its technology development
partnership with IBM, AMD is doing itself — and the industry — a big favor. AMD gets to lower its
fixed costs, making it profitable at a lower level of revenue, and it can still participate in leading-
edge technology development. It gets out from under some of its debt and receives a cash
infusion from a patient source. The bonus: it gets to participate in an entirely new business, a
foundry that takes in knitting from other fabless semi companies. AMD sweated this deal for a
long time. It wanted to enter into, not just any partnership, but the right partnership. Certainly,
Samsung and other large semi companies would have been happy to have a captive processor
and graphics company in the stable, but AMD wanted to continue doing what it does best:
developing computer innards. By moving in this direction, the company positions itself well in
both its existing business and a whole new future business. A maneuver worthy of Harry
Houdini. Bravo!
© 2008 Endpoint Technologies Associates, Inc. All rights reserved.
shaking, I found myself thinking about the nature of value. The weather has turned chilly here in
New England, and the leaves, golden. I took a few minutes to haul up a four or five armloads of
wood to the house in anticipation of a night near the frost line. The chunks were bone dry after
nearly two years in the shed, but still heavy because red oak is particularly dense and full of
heating potential. I cut and split that wood myself from a tree that fell in a storm. As I stood in
the shed, looking at a winter’s worth of wood, I thought about the fact that my family would be
warm, even if foreign sources of petroleum get more squirrely than they already are. I’m not as
young as I once was, but I can still split and carry wood, a value in itself. And with the day being
calm, bright, and almost warm at midday, I was happy to be healthy, at peace, and enjoying a
degree of energy security. Some of that value came from nature, which supplied the tree, and
from me, who anticipated the energy issue back in the Carter years, when I began burning wood
as well as gas. Forethought and work as well figured into it, because then I had to put my policy
into action by building the shed, by creating the slate and gravel steps up to the house so I
wouldn’t slip in winter on an icy slope, by fashioning the wood door (a sort of airlock for getting
wood into the house without making a mess), by harvesting the particular logs of this season,
and by putting them up so they’d be dry in time. And finally, by carrying them up. Raw
commodity value, forethought, and labor went into that value. You’d have to look awfully hard at
all those derivative securities to see where the value lies.
Meanwhile, a propos the work at hand, good on AMD for putting together the right partnership
with various financing groups in Abu Dhabi. By tying together its own process technology
development assets, its world-class manufacturing in Dresden, and its technology development
partnership with IBM, AMD is doing itself — and the industry — a big favor. AMD gets to lower its
fixed costs, making it profitable at a lower level of revenue, and it can still participate in leading-
edge technology development. It gets out from under some of its debt and receives a cash
infusion from a patient source. The bonus: it gets to participate in an entirely new business, a
foundry that takes in knitting from other fabless semi companies. AMD sweated this deal for a
long time. It wanted to enter into, not just any partnership, but the right partnership. Certainly,
Samsung and other large semi companies would have been happy to have a captive processor
and graphics company in the stable, but AMD wanted to continue doing what it does best:
developing computer innards. By moving in this direction, the company positions itself well in
both its existing business and a whole new future business. A maneuver worthy of Harry
Houdini. Bravo!
© 2008 Endpoint Technologies Associates, Inc. All rights reserved.
Unraveling the Threads
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