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08:58am EST 24-Feb-99 DLJ Securities (Kevin McCarthy)
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DLJ ****** DONALDSON, LUFKIN & JENRETTE ****** DLJ
February 24, 1999
TECH DAILY
TECHdaily@DLJ
TECHdaily@DLJ
Tech Talk
o We spoke with AMD (AMD: $18.75) management
yesterday, and believe the
company may have turned the corner in its speed yield
difficulties. Silicon
containing a design fix is shipping today, and will
essentially completely
displace older "flawed" silicon before the end of the
quarter. The company
confirmed it is seeing improved yields of 350 MHz and
400 MHz devices.
Unfortunately, the open market prices for these devices
are approximately
$85 and $145, respectively. With the 300 MHz and 333
MHz devices commanding
prices of about $50 and $70, respectively, we believe
AMD will have
difficulty maintaining its Q4 blended ASP of $89.
Although the company is
yielding some 450 MHz devices (open market price of
about $250), we believe
the quantities are too small to have much impact on the
current quarter.
The K6-3 is shipping at 400 MHz and sampling at 450
MHz, with initial
prices of $284 and $476, respectively. While the K6-3
could result in some
improvement in AMD's blended ASP, the gradual ramp of
the device will
likely result in only modest ASP improvement in Q2.
Furthermore, we believe
Intel will cut its Pentium II prices on Monday following
the launch of the
Pentium III, which will likely force AMD to drop the price
of its K6-3 in
response. We think AMD has an opportunity to reverse
the recent decline in
its ASP and restore strong revenue and profit growth in
the second half of
1999 if it successfully improves the performance of its
K6-3 device and
launches the K7 device on schedule in June.
(Boucher/Bunn)
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