Hi kash:
Re: "I doubt we will see $1/share.
But $0.80-85 surely wouldn't surprise me!!!"
Assumptions: (i)Assume AMD sells 6 million microprocessors per quarter in Y2000. (ii)Also assume flash memory contribution to bottom line is on average equal to Q4 (I agree, optimistic, but can't be ruled out at this time). (iii)Assume AMD ships 10 million Athlons in Y2000 (Salomon Smith Barney say 12.5 million). (1v) Assume non-Athlon ASP of $0.50 and Athlon of $2.50 (no reason why not if Athy remains superior architecture and if 1 gig Athlons are already in place, as rumoured, for market release).
Brief Analysis: Q4 ASP of $0.80 resulted in profit of $0.43 based on a microprocessor mix of about 15% Athlons and 85% non-Athlons...Q1 mix, if AMD ships 1.5 million Athys will result in a mix of 25% Athy's and 75% non Athys, and at assumed prices, result in an ASP of $1.00 and approximately $100 million more in profit than Q4 resulting in a Q1 eps of $1.00.
By Q4, the mix will be at least 50/50 if AMD is to ship 10 million Athys...A 50/50 mix, if the foregoing assumptions hold, will result in an ASP of $1.50, or about $300 million in additional profits, resulting in a Q4 profit well in excess of $2.00 and maybe even closer to $3.00!
Assuming Q2 and Q3 ASP's lie between Q1 and Q4, Y2000 eps will exceed $4.00 possibly by as much as $3.00 (i.e &7.00 in Y2000)...
Comment: Obviously the foregoing is a simplistic analysis, assumes no major hiccups in Dresden and assumes stable microprocessor pricing throughout Y2000...Given the favourable growth predictions in microprocessors for Y2000, an average Athlon ASP of $250 may not turn out to be unrealistic!
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