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Politics : Formerly About Advanced Micro Devices
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To: 5dave22 who wrote (104912)4/13/2000 3:35:00 AM
From: ptanner  Read Replies (1) of 1575570
 
Dave

Interesting, I've seen a few articles saying "Rambus(t) disappoints". But they beat the consensus by a full penny!

Maybe the analysts tossed out guesses they thought would be beat? Or perhaps it was how the earnings were realized. Don't know much about Rambus' earnings report but the tiny portion from royalties and decline in deferred earnings caught my eye.

I think the next few weeks will see a re-valuation of chip stocks. I'm also stocking up on more NSM.

I might add another semi position but will be more interested in a non-commodity producer (ie. not memory). While flash appears to be scarce for the next year or two (or more as cell phones make great economic sense for developing areas that can skip the massive investment in wires to serve a small but growing service population), the barriers to entry are not as great as MPUs. One flash producer I looked at (sorry no recall of which) was valued at a higher multiple to sales than Intel despite having losses and relatively modest projected earnings. The efficient producers with the volume to support investment in more advanced designs should prevail when the commodity is no longer as scarce.

I also recall an analyst who valued AMD's flash business at $45 and the MPU at -$5 when the stock was around $30. Once a producer's MPU business reaches sufficient volume to cover the fixed costs and includes the higher value processors the marginal profits are excellent -- as demonstrated by Intel and now by AMD as well.

PT
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