Hi Charles:
Revised eps targets as stated by Salomon Smith Barney are:
99Q4...$0.11, Q1...$0.28, Q2...$0.55, Q3...$0.55, Q4...$0.61 for a total of $2.00 in Y2000.
A $2.00 eps for Y2000 just does not reconcile to 12.5 million Athlons and Athlon production cost reductions of 40 to 50%! And that's without addressing the flash Q1 forecast of $224 million!
Simplistically, eps increased by $0.40 in Q3 to neg. $0.72 based on an incremental Athlon shipments of 200,000. Q4 eps is likely to improve by $1.00 to $0.32 based upon incremental Athlon shipments of 900,000. To get to 12.5 million Athlons by year 2000 end, increments in quarterly Athlon shipments might be 700, 900, 800, 1,000 (in thousands). Given the apparent positive increment in earnings attributed to the Athlon in 99Q3 and 99Q4, I can only assume additional quarterly increments in eps are to be derived (all other things equal, i.e strong flash) from additional increments in Athlons throughout Y2000 in order to realize the target of 12.5 million units by year end. On that basis, I do not comprehend the low estimate of $2.00.
As I have said earlier, $7.00 is not wholly out of the question assuming 12.5 Athlons and strong falsh throughout 2000, when one looks behind the numbers.
In any circumstance, AMD is significantly undervalued at $29. Now that consolidation at $28.5 +/- $0.75 has run its course, the next leg up can begin! The year 2000 is certainly shaping up to be one potentially exciting year and I expect that January 2000 will mark the initial stages of a major change in AMD perception in the marketplace.
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