Brian,
First let me say this, both Cyrix and AMD are tiny (I'm comparing to the market leader). I will grant you that AMD is a much more stable firm. But if they have half the problems they had with the K5, they are in big trouble.
The folks at Nexgen are not math geniuses either, their nx586 (or whatever they called it) didn't even have a math coprocessor on board, don't forget that. AMD's engineers are useless (I'm not saying that as a Cyrix fan, but objectively). They couldn't build a K5 and the K6 is really nexgen's. So the real engieering staff at AMD is Nexgen's staff and they are even smaller than Cyrix's!
Now AMD does have a possible advantage with their fab plant. It is however untested for volume and could fail miserably (it happened to a number of other companies in the past).
AMD has more inherent value due to their fab, but they devalue quickly. Cyrix is not slung with the debt of having to constantly build fab plants.
What's AMD's balance sheet look like? I don't know personally. I do know fab's cost 1.5Billion+ $ and if you have to build one every two years, that's a big chunk of money (even Intel shows it on the bottom line).
The other problem with AMD is right now they only have the one entry. The K5 is severly lagging in it's speed grades. They are having problems with yeilds (well known).
Now, the other side of the coin.
Cyrix is always going to have the possibility of becoming easily production constrained. If they want more, they'll have to pay for it (and everyone else knows that too, including the companies they are going to pay).
The Cyrix M2 is significantly cheaper (for what I understand) in terms of transistors. IBM is planning a .28 process sometime this year, that will significantly reduce the size of the chip, but until then, it is VERY large (and thus expensive).
You said you doubt "tiny Cryix will be better.", well they are better now. In fact in terms of real world applications, the smoke both Intel and AMD (let's not forget their p200+ is really running at 150Mhz, if they were to crank one to 200Mhz, Intel would look like a bunch of baboons (sp?))
Both companies have significant upside potential. I feel the Cyrix has more for two reasons: 1) it is a possible buyout candidate (I know TI would love to have them, but I don't think so, I think TI may fab for them and TI has .18 micron which would make Cyrix's M2 die size on the order of 70~mm2!)
2) Cyrix has less net worth and fewer shares outstanding, therefore if they do well in the next two quarters, they should soar. With this though is the downside, they are alot more volatile and vulnerable to bad Q's.
What AMD really has going for it is it's diversity (their new "logic" division for example, and the fact that even if they can't fill their fab with their chips, they can always sell capacity) and greater total value.
In closing I own Cyrix. I think they will outperform AMD in the next 12 months by a factor of about 1.6:1. I may be wrong, but I hope not.
I look forward to your reply.
Steve |
