The AMD Naysayers:
(The following is a reposting of previous post correcting ? marks which, for my eye, made it very difficult to read. Apologies, as I didn't realize (")'s became (?)'s when copying from word to SI).
A west coast buddy who is looking at purchasing AMD April 30 calls just called me to discuss the merits and possible pitfalls of such a strategy. Seems his broker, Merrill Lynch has so far adopted the "Intel party line" that goes something like: "AMD may be OK for the time being, but Intel?s response will be swift and devastating"?.
Not to denigrate Intel, but it seems to me that a prudent investment strategy, particularly for options, is to consider the "here and now" product lines as compared to some invisible "future product line". Not only is the Athlon "here and now" but it is rapidly gaining the limelight not to mention market share in the PII and PIII highly profitable markets. And Athlon, by all counts, looks to have headroom enough to be able "to carry the AMD flag" and fend off competitors "future product line" threats for the foreseeable future. As far as I can discern, there may be some serious problems with Intel's "some-time-in-the-future Athlon competitor" not the least of which is "all-in price" for an Athlon equivalent (assuming Intel can come up with one) system. The Athlon seems to pose a major conundrum for competitors with its "exquisite and relatively low production cost" architecture.
A major "trump card" used in the past by Intel is no longer available as Intel no longer has the luxury of establishing a "loss-leader" subsidized by higher margin product lines as
it seems to have done with Celeron in the "under $1,000" market segment when AMD became a market share threat, now that Athlon is competing in the PII and PIII market place. For this reason, the Athlon poses a much more potent threat than did the K6-2.
It seems to this invesor that Merrill Lynch's current research is supportive of what remains as Intel's only viable counter response to the Athlon...that being, avoidance of the "what is" with a suggestion of "what might be". The market's very warm response to Athlon (1.5 million (?) shipped by Dec. 31/99) in its very short life span of 5 months, coupled with several seeming marketing blunders by Intel in its attempt at neutralizing the "very real" Athlon threat to its high margin PII and PIII (can workstations be far away?)market segments, is the "what is". Several muted attempts by Intel over the past few months to respond to the Athlon marvel, just might be indicative of the "what will be" in the foreseeable future.
The Merrill Lynch research presented to my west coast buddy today obviously doesn't factor in the possibility that, with the Athlon, a "paradigm shift" has taken place. With the Athlon, AMD is very well positioned, like at no other time in its history. Athlon sales to date, Dresden ramping up progress and planned exponential growth in flash memory production in Y2000 all suggest to me, that a "paradigm shift" has indeed taken place. Recent price action in AMD is supportive of such a scenario.
We'll just have to wait and see if a "paradigm shift" is confirmed by an AMD price over $63 in Y2000.
My investment strategy is predicated upon such a favourable outcome for AMD. |
