Sorry about double posting, but I think this info should be on both threads (thanks to the king of links steve harris): messages.yahoo.com
MG: AMD: Banner Accomplishment
11:52am EDT 10-Jul-00 BofA Montgomery (Whittington, Richard L 212-583-824) AMD
BANC OF AMERICA SECURITIES ** MONTGOMERY DIVISION ** BANC OF AMERICA SECURITIES
ADVANCED MICRO DEVICES, INC. STRONG BUY
July 10, 2000 SEMICONDUCTORS NYSE: AMD
Richard L. Whittington (212) 583-8246; Analysis of Sales/Earnings
rwhittington@bofasecurities.com
DJIA: 10636
S&P 500: 1479
PRICE: $82.00 FYE 12/31 1999 A 2000 E 2001 E
12-MONTH TARGET PRICE: $150 EPS
52-WEEK RANGE: $97-16 Q1(MAR) ($0.88) $1.15 A $1.32
FULLY DILUTED SHARES O/S: 172.0 MM Q2(JUN) 0.53 1.20 1.39
MARKET CAPITALIZATION: $14.1 BB Q3(SEP) (0.72) 1.46 1.64
AVG. DAILY VOL. (3 MOS.): 5,405,856 Q4(DEC) 0.43 2.08 1.90
SECULAR EPS GROWTH: FISCAL YR ($0.63) $5.90 $6.25
FY 2000E REVENUES: $4,942.0 MM P/E N/M 13.9 13.1
MARKET CAP./REVENUES: 285% P/E/G
3/00 TOTAL DEBT: NONE
3/00 LTD/TOTAL CAP.: 138.1%
3/00 ROAE: 15.9%
3/00 SHAREHOLDERS' EQ.: $1,064.1 MM
3/00 BOOK VALUE/SHARE: $6.19
DIVIDEND/YIELD: NONE
Banner Accomplishment
AMD closed the June quarter with momentum for a robust second half and we believe stands on the verge of widespread investor acceptance. Already clearly out of the doghouse, AMD is now a recognized microprocessor innovator and Flash powerhouse. A radical departure from Wall Street's perception, we believe AMD is about to be catapulted back onto investor buy-sheets and must-own lists.
Orders remain strong in the company's three principal businesses, microprocessors, Flash memories and networking peripherals. We anticipate a perceptible upside to our published $1.20 per share estimate on $1.15 billion in revenues and for additional healthy upside in the second half.
As a result of enhanced second half visibility, we have raised our price target to $150 from $100. Our Street-high EPS estimates of $5.90 (untaxed) and $6.25 (31% tax rate) for 2000 and 2001, respectively, remain intact. However, even on our new price target, the indicated multiple is a mere 24x next year's estimate, suggesting material upside ahead should AMD execute upon our model.
New capacity is being ramped rapidly with management indicating the new Dresden, Germany facility (Fab 30) now in excess of 1,200 wafer starts per week. Our due diligence, to the contrary, suggests that Dresden is now running at 2,000 starts per week (not the per month mistakenly placed in last week's note). Yields are running progressively higher and speed grades of processors produced now routinely exceed Austin, TX's Fab 25.
Combined with benign to improving Flash contract pricing and banner accomplishment in x86 processors, rapid capacity gains set the stage for significant upsides to our 2001 estimate. As opposed to the $6.2 billion in revenues 51% gross margin and $6.25 per share we're now modeling, we can easily envisage revenues pushing $7 billion, gross margins 60% and earnings double digit - after tax.
AMD Exploiting Microprocessor Boom
AMD's performance 7 Series (ex-Athlon) Thunderbird is being produced in rapidly increasing quantity in Dresden, whereas the value line, Duron, is being ramped in Austin. Thunderbird is targeted at the high end of Intel's Pentium
III family, whereas Duron is rapidly replacing AMD's still strongly demand K6 family (upside shipments in Q2) and targeted at Intel's Celeron. |
