A huge portion of AMD's bleeding is from the ATI acquisition for which was over valued at the time of purchase and lost allot on intel chipset sales which further cut ATI's earning potential. If AMD had not bought ATI they would not have the millions in loan payments to make and would have been a much leaner company.

The bread and butter of cpu sales is not the $300+ cost cpus, I would say generally most people go for a pre built computer with a cpu thats a little more expensive than the cheapest.

You don't need a high end product to sell to the masses, you need a good affordable product, nobody needs say i7 for web browsing or office suites.

You DO need a high end product to sell to the enthusiast that is more demanding and more apt to use the extra power.