Monday, July 10, 2006

Show me the money

Amid all the praise being heaped by the press upon lawmakers –namely state Senate Majority Leader Joe Bruno –and Advanced Micro Devices, it’s pretty easy to let another starker headline slip by.

And after weeks of bold-faced headlines such as “chip plant will usher county into brave new world” and “AMD chip plant is a go,” a wire story published by the Post Star last week gives quite the opposite impression.

Simply put, the beast has awoken and isn’t that thrilled about the competition getting, well, more competitive. Intel is waging an aggressive campaign to cut a swath out of AMD’s business by under-selling all of their chips.

Basically, the corporate heads at Intel realize they’ve got a new chip coming out next month, so the best thing to do is clear the decks of all the older models and in the process, give AMD a nice little knife to the side. So far, it appears to be working out pretty well.

While all chip makers typically loose some earning during the lazy hazy days of summer, AMD announced that its profit returns dropped by 9 percent in the second quarter, which is more than twice the normal decrease in revenue. Consequently, AMD’s stock dipped 51 cents, or 2.14 percent in Friday afternoon trading on the New York Stock Exchange.

While the cause of this drop is still up for speculation, there is one thing clear: Intel has dominated the chip market for notebooks and doesn’t appear to be letting up anytime soon. AMD, on the other hand, has aimed their product more at desktop models of computer, the market for which has declined precipitously in recent years.

What does this all mean for Saratoga County? Well, before there’s a shovel in the ground –and even after there is –don’t count the chips until the first processor rolls out of the $3.2 billion plant. As one blogger has recently opined, just because Hollywood Joe and the Legislature are pegging AMD’s plant as the next big thing, there’s no guarantee it will actually bear the fruits they have drooled over for so many months.

There are plenty of examples both recently and throughout history where potential businesses petered out long before they ever brought anything to the economy. The result is millions of taxpayer dollars forked over to some business that ultimately cuts and runs, once they feel the brunt of doing business in New York.

It’s been widely published that the estimated 1,200 jobs AMD will bring to the region will end up costing state tax payers about $1 million a piece. Many have said that’s the cost of attracting clean and profitable industry to the region. But the problem comes when half that cost or more gets dumped into a company that ultimately decides it’s not worth their time to create a single one of those jobs.

Even The Saratogian alluded to the tentativeness of the agreement between the state, Saratoga County and AMD, albeit in a back-patting editorial about how the company will revolutionize Malta and the surrounding region. Ironically, in an editorial that ran only two days following the company’s second quarter announcement, the paper cites “possible changes in the economy and the competitive chip business” as being circumstances that could collapse the sweetheart deal.

Only time will tell what fate will befall the 1,350-acre plot of land just a few miles off the Northway. But one thing is for certain, highly publicized promises made during election years aren’t exactly the most believable ones, especially when they’re coming from the mouth of a 77-year-old senator who will more than likely be retired before everything shakes out over in Thomas C. Luther’s forest.

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