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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 221.06

-1.1%

Jan 5 3:59 PM EST

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To: niceguy767 who wrote (4867)	8/14/2000 3:44:49 PM
From: aburner	Read Replies (2) of 275872

niceguy (and thread), you assume an Athlon ASP of $400M/1.8M = $222. I think that's too high for two reasons: a) given last quarter's ASP of "low 90s" Athlon ASP was probably already near $200 and the upcoming pricecuts won't help to make things better. b) The additional 1.8M CPUs will also contain a number of Durons with considerably lower ASPs. At this time I'll stick with AMD's guidance of breaking into the $100+ range in Q4 and assume an overall ASP in the high 90s for Q3. Here's my shot at AMD's Q3 and Q4 earnings: Q1 Q2 Q3 Q4 Revenues Computer Products Group (CPG) 644 667 789 1012 Revenues Memory Division 327 362 398 438 Revenues Communications Division 101 117 18 - Other Revenues 20 24 45 50 Net sales 1092 1170 1250 1500 Cost of sales 605 612 631 720 Gross Margin 44.53% 47.66% 49.50% 52.00% Research and development (R&D) 161 155 165 169 Marketing, general and administrative 144 152 160 164 Total costs 911 920 956 1053 Operating income 180 250 294 447 Interest income and other, net 21 20 20 22 Interest expense (11) (11) (18) (10) Income before taxes and joint venture 190 258 296 459 Provision for income taxes - 51 59 92 Net income 189 207 237 367 EPS 1.15 1.21 1.34 2.04 All numbers mean millions USD except for gross margin and EPS. I retrieved the data for Q1 and Q2 from the "CONSOLIDATED STATEMENTS OF OPERATIONS" which can be found at amd.com. To simplify matters a bit I've skipped the income/loss from the joint venture since it is supposed to be self funding and won't make a big difference anyway. I derived my estimated numbers for Q3 and Q4 from the Q2 CC which can be found at jc-news.com. My thanks go to Viktor Mandelstam for writing the complete transcript and to JC for making it available on his website. Comments Q3) Revenues CPG: 6.9M CPUs á $97 + $120M (embedded, chipset and networking) Revenues Mem: Q2 $362M + 10 per cent; Revenues Comm: 18M for July operations Revenues other (Foundry & Services): $21M for Comm + $24M for Vantis Cost of sales/gross margin: CC guidance was for "47% +/- a few points"; I expect gross margin to be higher than 47% for two reasons: a) CPD was sold; I think gross margin was lower there b) lower cost due to TBirds w/ integrated L2 cache vs. Athlons with expensive SRAM R&D: Q2 + $10M (CC guidance) MG&A: up from Q2 (CC guidance) Interest income/expense: see guidance in transcript EPS: had some trouble calculating EPS; dividing e.g. the $207M from Q2 by 176M shares (see AMD's statement referenced above) equals to $1.17 instead of the actual $1.21. Does anybody know which number of shares is actually used for EPS calculation? I've assumed 176M shares for Q3 and 180M shares for Q4. While EPS $1.34 for Q3 seems low, please don't forget that we will "lose" Comms sales of about $80M which would account for an additional EPS of $0.18. The resulting EPS of $1.52 would mean an increase QOQ of more than 25%. Not bad! Unfortunately the average Joe Investor probably won't recognize this (just as the taxed vs. untaxed EPS story in Q2) so I don't expect the stock price to make big advances on Q3 earnings report. :( Possible upsides: CPG: with the Durons missing the back to school season I don't see much of an upside here; Memory revenues could be higher since Q1->Q2 was already 10.7 percent; Comms/other: Can't think of anything here; Gross margin: could actually be higher as Q1->Q2 was an increase of more than 3%; Possible downsides: "Actual results may differ materially from our plans and expectations!" Comments Q4) This quarter should be the real kicker! Unless AMD decides to pay 31% taxes already (in which case I hope they'll be able to communicate it better this time) there's no holding back here. If a QOQ increase in revenues of 20% and 52% for EPS doesn't boost the stock price tremendously probably nothing ever will! CPG: Since AMD talked about "approaching 7M and 9M" I've been conservative here too and assumed 8.7M CPUs á $102 + $125M (chipsets, embedded, networking) Mem: yet another 10% increase from Q3 Foundry & Services: $50M according to Q2 CC guidance gross margin: should definitely be higher than Q3 due to the big increase of CPUs sold R&D: "targeting a total of $650M for the year" MG&A: "targeting a total of $620M for the year" Possible upsides: CPG: both # of CPUs sold and ASP Mem: same as my consideration for Q3 gross margin: could easily approach 55% (or higher) Possible downsides: "Actual results may differ materially from our plans and expectations!" I'd like to invite everybody to comment on my numbers and point out possible mistakes I've made and things I forgot. TIA, ABurner. P.S.: Net income from all quarters equals to $1,000,000,000! Sounds familiar, eh? :)

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