A View from North of the 49th:
Current short term weakness in AMD price can be directly attributed to INTC (panic(?)) price cuts as the general market assumes (incorrectly (?))that INTC will be as successful as they have in the past in beating back AMD with this tactic.
Current general market has yet to realize that INTC is no longer competitive at the top-end and hasn't been since late October and that these price cuts are acts of desperation to stem an eroding top-end retail market share. In the short span of 6 months, AMD has laid claim to the crown of the top-end...AMD has served notice that within the next 6 months, it will make significant inroads into the small business/workstation segment, a crown jewel currently held by Intel...and soon to be shared with AMD!
AMD shipped about 24 million processors in Y99, about 1 million (round figures) Athlons and 23 million non-Athlons. Athlon ASP of $250 and Non-Athlon ASP of $60 resulted in total processor revenues of approx. $1.5 billion and an ASP of $63.00.
In Q4, when AMD shipped 1 million Athlons and 5 million non-Athlons, ASP jumped to $80 and AMD showed a profit of $0.43...up from a loss of $0.72 in the preceding quarter during which they shipped only 200,000 Athlons...NOTE: An increment of only 800,000 Athlons contributed the lion's share to the positive change in earnings by over $1.00 in only one quarter!
AMD Q1 revenues are expected to exceed record Q4 revenues of $962 million, i.e. AMD's Q1 revenues will exceed $1 billion!...(If it were Intel suggesting Q1 shipments were to exceed Q4 shipments, that would be understandable as Intel's Q3 to Q4 processor sales were flat owing to the obvious continuing production fiasco with their PweeIII 733's and above)...but in AMD's case Q1 revenues are to exceed all-time high Q4 revenues which were up 35% from Q3!)
In Q1, both HP and GTW have become entrenched Athlon supporters. Combined with numerous additional Athlon vendors overseas and increasing availability of motherboards, one can conclude relatively safely that Athlon shipments in Q1 will most definitely exceed the 1 million shipped in Q4...In fact it is not inconceiveable that Athlon shipments will double to 2 million which would ensure an ASP of $100 and an eps well above Q4 eps of $0.43, possibly approaching $1.00.
Assuming AMD ships 24 million processors in Y2000 (very conservative given exploding Athlon shipments and Dresden coming on stream) and assuming Salomon Smith Barney are accurate in their estimate of 12 million Athlons in Y2000, the mix of 50% Athlons and 50% non-Athlons will result in an ASP of $125, assuming $200 Athlon ASP and $50 non-Athlon ASP...or an increase in revenues of almost $1.25 billion, much (at least 50% and probably 75%)of which will flow directly to the bottom line and resultin a Y2000 eps exceeding $4.00.
AMD's primary objective this year is to ship a minimum of 10 million "spry Athys". Given Intel's "worn and fatigued PWeeIII entry" as the primary Athlon contestant, the 10 million should be relatively easily achieved...April 12, when AMD Q1 earnings are posted, will provide ample evidence, imho, that 10 million Athys will be readily shipped in Y2000! I doubt that it will take until April 12 earnings to light a fire under AMD price! |
