Albert & thread,
Looks like the morale of the thread dropped to a new low when the above Zacks EPS resulted in sub-$80 stock price.
It is downright amusing how every other guy cheers niceguy and looks for a $120 price target one week and the pendulum swings all the way and there is talk about $40. I agree $40 could happen - after the split.
Let's take a close look at what happened and see where we go from here.
1. AMD shipped 6.5Mu in Q1 and Intel probably shipped 32Mu in the same time period. Of the 6.5Mu, 5.3Mu were K6s and 1.2Mu Athlons
2. In Q2, AMD shipped 6.3Mu and Intel probably shipped 32.5Mu. Of the 6.3Mu, 4.5Mu were K6s and 1.7Mu Athlons and probably 100Ku Durons)
So, AMD lost about 0.8 Mu low-end business from Q1 to Q2. If the infrastructure was clean, the Duron launch would have happened in May and Duron would have made up for that 800Ku or somewhere in the neighborhood of 500k-1M. THAT IS THE LOST OPPORTUNITY. GONE. PFFFFT.
Now let's fast forward to Q3. AMD is promising 3.6Mu Athlons/Durons and about 3.4 Mu K6s. Of the 3.6Mu Athlon/Durons, Durons probably will account for 1.2-1.6Mu. So, total low-end units AMD is planning to ship in Q3 is about 4.6 to 5Mu. LESS THAN Q1 and in the same ball park of Q2. This, in a quarter when units are supposed to go up by about 10%. The reason this target is this low is because a month's worth of Durons are missing from Q3. In other words, the current projections have already written off one month of Duron shipments. I do not think the thread should worry about this now. THIS PART IS OVER. Now, if there is further delay and there are no Durons out there in the next week or so, it is time to start worrying.
So much for the tragedy of lost unit share. Now let's look at the revenue side. The unit share has slipped last quarter but the gains for AMD are coming on the revenue side - that's why the sales went up even though the units went down.
AMD management has been terrible at motherboards but these guys are not dumb. The infrastructure is coming up first on Thunderbirds and then on Durons. For every $50-$70 chip sale AMD is ceding to Intel, AMD is gaining one $150-$200 chip sale. (now, ideally, AMD shouldn't have to cede low-end share to makeup high end)
Looking forward, AMD continues to keep its lead in the MHz area COMFORTABLY. Emperical data suggests that top-tier OEMs are just now starting to get 933s as needed. By the time 933MHz supply becomes plentiful across the board, AMD would be shipping 1.1G in volume (I expect the motherboard issues to be completely licked by that time). And, it is safe to assume that by the time Duron actually begins to ship, 750MHz will be the top speed grade there.
Because of this aspect alone, people who are concerned about price-war, IMHO, are completely ignoring what price war can do for Intel. What will Intel do? Cut prices on the few money making 800-1G parts they sell to squeeze Durons? Makes no sense. And, bundling will not work this time Intel is not making too many chipsets - not in the PC133 area anyway. Check out pricing on the 815s, Intel is asking for mucho premium because it needs every cent it can get to make the investors satisfied. Look at all the shenanigans in the reporting (there is only so much deception Intel can do to make the IABG numbers to look good. As TWY says, any more damage to IABG and the "all other" could have more losses than revenues)
So, in summary, Intel is no position to do a price war and it will not be until Wilamette ramps up - a 2001 event. The negative sentiment on the thread is unwarranted. Not being in la-la land is good. Contrarian position is fine. At the same time, let's tie the discussion to something realistic.
What we are seeing is a vote of no-confidence in the semis. I should know - a large chunk of my money is in semis. AMD took more beating than Intel because of options expiration and the lack of confidence of street in AMD given the impending P4 launch.
And why should the investors have confidence when
- the earnings press release praises infrastructure support and when the conference call says the infrastructure support was not quite there
- the product released a month back is not in the stores
- the unit ships underperform and management is blase about it and does not properly articulate what happened
- the management can't even given proper tax guidance
- the management gets defensive and can't even properly answer the question about why the ASPs are only low-90s
Regardless of the sins of management in the conf call (and before), the stock with accelerating earnings and strong product portfolio deserves much better PE than what AMD is getting today. It will happen - as Wilamette reports start coming in and as it becomes clear AMD is not going to roll over and die. Let's be patient and do what we can do to collect intelligence and present to the thread so that we can have a better understanding than others on how the company we have invested in is doing.
And, by the way, let's stop dreaming about Sledgehammer in 2000.
Chuck |
