ted, re:<Someone said this AM that they thought that AMD's sluggish stock price is due to some problems with Dresden yields. Could be...but I continue to think it has more to do with this disparity in earning's estimates [due to 2001 having a much higher tax rate than 2000.]>
IMO, more important than either of these is two issues:
1. Fear of sufficient demand for high end processors, especially since it appears the economy is cooling down RADIPLY.
2. Fear of inadequate infrastructure support, or, more generally, fear of a botched product transition.
As for fixing the tax problem, I expect AMD will give guidance about tax rates to analysts within the next two weeks, and we will see Y2000 estimates dropped slightly and Y2001 estimates raised significantly. AMD probably doesn't know yet whether the sale of half the COMM division will be completed in Q2 or Q3. The sale of this half-division will almost certainly use up all the remaining tax credits AMD has from prior losses. BTW, I'm not an accountant, but a rate of 15% for the last three quarters does not make sense. Once the tax credits are used up, they are used up. So I expect ONE QUARTER with a lower tax rate, maybe 15%, followed by the remaining quarters having a full tax rate.
Product transitions are tough, especially the 100% switchover that AMD is pulling. Intel could never due a 100% wafer start switch like that. We now see why AMD was building inventory in the distribution channel over the past two quarters.
None of the four fears is rational, but thats to be expected for a stock thats gained over 300% in seven months.
Petz |
