Robertson+Stephens: Advanced Micro Devices, Inc.
NYSE: AMD $15.38
Long-Term Attractive
F2000 EPS: $2.44 from $2.49
F2001 EPS: $2.23 from $2.35
Eric Rothdeutsch, Semiconductors/Computer Hardware
“Our recent checks with motherboard manufacturers in Asia indicate that motherboard demand
continues to be weak while inventories of components, including chipsets and DRAMs, continue to
build,” said Rothdeutsch. “Our checks also indicate that Via’s KM133 chipset — which mates with
AMD’s Duron and Athlon processors — has yet to be approved by AMD. Given that the KM133 offers
integrated graphics and eliminates the need for a separate graphics card, sales of Durons into the
value end of the PC market effectively should be limited. We believe that the work-around for the
KM133 requires a re-layout of the PC motherboard, resulting in a time penalty that should push out
the availability of Duron/KM133 motherboards into 1Q01. Given weak PC demand, no upside from
KM133 motherboards, and what we believe is an imminent price cut on processors, we now believe
that our previous 4Q00 expectations of 6.5 million K7 processors was overly optimistic and we are
cutting our processor shipment forecast to 6 million units. We also are dropping our processor
average selling price assumption from $88 to $80. We are lowering our F00 revenue and EPS
estimates from $4.8 billion and $2.49 to $4.7 billion and $2.44, respectively. Our F01 estimates are
going from $5.68 billion and $2.35 to $5.55 billion and $2.23, respectively. We are maintaining our
Long-Term Attractive rating on AMD and lowering our 12-month price target from $30 to $27, or 12
times our new F2001 EPS estimate of $2.23, to reflect what we believe is a deteriorating environment
for PC component suppliers.” |
