Jim,
Lets see...according to Whittington's report below he has discovered the following in the past few days since his downgrade. The guy learns fast.
1) Strong Demand from OEMs
2) Undersupply of MPU's
3) Strong Notebook Sales
4) Strong Server Demand
5) Increasing ASP's
6) MPU's remain "integral" to Internet Servers
Richard L. Whittington
Upgrading AMD & Intel to Buy
Advanced Micro Devices (AMD, $28.88, Buy)
We're raising our rating on AMD to Buy from Market Perform and increasing our price target to $40 from $30.
Our estimates remain unchanged at $2.59 per share for 2000 and $2.75 per share for 2001.
Intel (INTC, $58.88, Buy){1}
We're raising our rating on Intel to Buy from Market Perform and increasing our price target to $70 from $55. Our estimates remain unchanged at $1.66 per share for 2000 and $1.80 per share for 2001.
PC Build Rates Seasonally Strong
AMD and Intel continue to register strong demand from PC OEMs thought to remain in an undersupply condition for microprocessors. Since declining over the past week, it is our opinion that the shares of each microprocessor
supplier sufficiently discount potentially slower PC sell-through as well as the potential for aggressive pricing this winter. We continue to receive confirmation of strong notebook PC and server demand, even if desktops are less clear.
While we believe Intel continues to fall short of earlier output goals, indications are that they are ramping processors at both the high and low end,
thus facilitating improving PC/server build rates this fall. However, the likelihood for continued production moderation as the transition from Pentium 4 occurs suggests moderate overall microprocessor volumes during this period. For this reason, pricing should remain relatively benign and each company is in position to register ASP increases in coming quarters.
Certainly no longer central to semiconductor industry fortunes, microprocessors remain integral to Internet servers and portable information appliances such as notebooks as well as several emerging classes of handheld access devices. We're sure the competitive tug of war will continue between these two arch-rivals but overall market strength should paper over their
differences. |
