Steve,
<Long term though, I certainly do like that AMD is forecasting production 31.8 million Athlons in 2001. It's scary to think what the upside potential for AMD's earnings in 2001 if Athlon continues to excel and everything else stays stong, maybe $12 a share (and that is taking into account taxes & Dresden depreciation). >
Well, I can conjure up a lot more scarier situations. For example: Wilamette ramps beautifully and AMD flounders under pressure bringing their average prices back to the $60-70 range. At that rate 30+ million processors can be shipped and EPS may not exceed a dollar for the whole year. I am not saying that will happen but I am saying all the rosy numbers being thrown around assume the good times continuing to roll. ("good times" defined by pathetic performance by Intel, supply constrained environment in CPUs and Flash). It was not long ago that Intel was losing money on flash and AMD was barely breakeven.
This is tough business: I have seen fortunes being made and lost in one semiconductor cycle - many times.
<The slow global PC growth forecasts for 2000 have turned out to be worthless. The whole world wants to get on the Internet, and for the next couple of years they'll be logging on with PCs. With quality laptops now close to $1,000, many people in the U.S. are going to get one as a second home PC. I think sub-$1,000 laptop sales will explode during the 4th Quarter 2000 with AMD chips gaining the lion share of the market.>
In hindsight, I think a lot of this boom is being driven by companies and individuals converting the funny money in the internet stocks to pay for goods and services. I will not be surprised if we experience a serious downtick in the business as some of these valuations disappear.
<Finally, does anyone think Intel really does have the capacity to produce higher speed Celerons now?>
The latest move to not pursue higher speed Celerons indicates:
a) either Intel saw huge uptick in demand, wisened up and realized that there is no point making Celerons when it can make more money by selling PIIIs
b) or the manufacturing problems are very severe and Intel is desperate to save Q2
<It would have been dumb to flood the market with equally fast Celerons given AMD is already maxed out -- Intel would have only been undercutting its own profit.>
Yes. True. Now, I hope AMD will do the same and stop new K6-2 waferstarts and increase Athlon waferstarts.
<Intel does lose some revenue, but maintains its overall price structure and keeps its ASP high. >
Intel gains a lot in the short-term but loses a LOT more in the long term: Intel over the last year has been creating a reputation as an arrogant, unreliable supplier playing technology catchup.
Some of the OEMs who got jerked around by the cancellation of the new Celerons will be considering Spitfire a lot more seriously.
Chuck |
