@WilliamWatts
Yes, the fab spinoff was a great idea with the increased capital costs and the fact AMD couldn't use all that capacity itself but otherwise would still be paying to have it.
AMD will not have any chance at being the performance leader until Bulldozer in 2011. But it doesn't matter! >95% of the market is looking for value not absolute performance, and AMD is still competitive there. They just have to keep profitable. Their graphics and chipset side should help, 5xxx margins are much better than 4xxx and Nvidia is no longer a threat in either market.
On the server side AMD will be completely competitive in 2 months. Magny-Cours will be 12 cores, priced against* Intel's quad- and hex-cores with similar performance and power consumption**.
*No, not against the 8 core. That will be much more expensive than current Xeons.
**There will be 8 and 12 core models with 55W typical power, and 6 core models with 35W typical power.