Ibexx, Gary - Re:"make up your loss by buying AMD puts--a no brainer..."
I would advise you to study this plan of action very carefully - and its consequences.
AMD has, apparently, a K6 that was functional enough to send it out to a few "development" partners. If the K6 is even remotely functional, AMD should be able to clean up the known faults and be in production in four to six months.
Now, production for AMD does not have to be any where near Intel's levels. If they ramped up from a few thousand a week to twenty or thirty thousand or more per month, they could easily crank out 250,000 to 500,000 K6's in 1997. Not a lot by Intel's standards, but...
at an ASP (assume this for argument's sake) of $275, that is $375,000,000 in revenue for 1997, about 10% of AMD's current annual revenue (assuing 500,000 total units). This revenue growth rate could be higher depending upon volumes and ASPs.
Growing 10% or more presents a good opportunity for AMD's stock, especially if this number is on the low side. ANTICIPATION of these results will drive the stock even higher once the part does begin real production.
Why buy puts with this scenario in front of you? AMD may not be Intel, but they have a product, a fab, and an obsession for a chunk of the x86 market that will drive them to perform.
Paul |
