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Politics : Formerly About Advanced Micro Devices
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To: kash johal who wrote (66336)7/21/1999 5:11:00 PM
From: Saturn V  Read Replies (1) of 1574054
 
I agree with you on most of your points.

The K-7 will be a tremendous technical achievement, but cannot save AMD financially, unless some painful surgery is undertaken right now.

THE REVENUE WILL BE FLAT TO DECLINING:
1. Everyone seems to agree that K-6 volumes cannot go up. Given the existing pricing of Celeron and the new Intel 810 chip set, to sell at the traditional 40% below Intel will mean a price at $30. The material cost for the package alone is $20. So the K-6 front is hopeless.

2. K-7 processor has done better on the published benchmarks than expected. However you have already noted that the motherboards are not there in the volumes needed. You are going to have similar problems with cartridges and chip sets. It will also take time to establish the reputation and brand name needed to sell a high end product. It will take a year or so before K-7 will ship at a 1 million+ per quarter.

THE COSTS WILL BE GOING UP:

1. As you noted the Dresden depreciation expenses have not yet begun.Most of the labor expenses may also be capitalized, and thus deferred right now. As soon as Dresden revenue begins, the free ride will end, and the expenses will increase by more than $100 million per quarter.

THE AMD MICROPROCESSOR BUSINESS WILL BE BLEEDING FURTHER FOR ANOTHER YEAR. UNLESS THE FLASH AND COMMUNICATIONS COME TO THE RESCUE, AMD COULD BE FACED WITH INSOVENCY.

SS AMD is chasing Moby Dick. Captain Ahab is steering SS AMD straight into the rocks, because he thinks that a shortcut must exist between the rocks, and he will thus gain on Moby Dick. The world watches the fate of SS AMD with bated breath.
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