NG
some possible mobile palomino delays? Did I miss something?
Regards
-Albert
03:38pm EDT 9-Apr-01 Josephthal & Co. Inc. (Lawrence W. Borgman 212-907-4169)
AMD: Reduce Estimates: Flash Memory Price Declines and Possible Palomino Delay
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Josephthal & Co. Inc.
Institutional Research
200 Park Avenue
New York, New York 10166
(212) 907-4000 Fax: (212) 986-8121
Mid-Day Note - April 9, 2001
ADVANCED MICRO DEVICES - Buy - (AMD, o,b)
Price 52-Week EPS (FY: 12/31) FY P/E
4/9/01 Price Range FY00A FY01E FY02E FY01A FY02E
$19.09 $48.50- $13.56 $2.36 $1.58 $2.25 12.1x 8.5x
Prior: $1.91 $2.50
Quarterly EPS March June Sept. Dec.
1999A: $(0.40) $(0.55) $(0.36) $0.22
2000A: $0.58 $0.61 $0.64 $0.53
2001E: $0.38 $0.35 $0.40 $0.45
Prior: $0.43 $0.51 $0.59
DJIA: 9794 Shares Outstanding: 350 Mil.
S&P 500: 1129 Market Capitalization: $6.1 billion
Reduce Estimates: Flash Memory Price Declines and Possible
Palomino Delay
We have reduced our estimate for AMD for 2001 from $1.91 to $1.58
to reflect a weakening flash memory market. AMD has instituted
suit against Alcatel for not living up to the terms of its three-
year contract with AMD, which is due to expire at the end of 2002
and reported to be worth about $300 million. Alcatel was using
the flash in cell phones and there has been discussion that
Alcatel might be leaving the handset market. While it is
somewhat unusual for a semiconductor supplier to sue a customer,
AMD put several of these contracts into force last year, when the
market was hot, to provide some protection on the downside which
would inevitably come. In effect, this puts AMD's other flash
memory customers on notice. The flash memory market is dominated
by Intel and AMD/Fusjitsu. Only a limited portion of the flash
market goes through the spot market, which gets reported as being
quite weak. However, the contract market, while in decline,
seems to be down much less. Roughly 35% of AMD's revenues
originate in the flash market, and it accounts for somewhat more
in profits, perhaps 50%, we believe. At the beginning of the
quarter, management was targeting 40% growth in flash revenues
this year, but that has declined to around 30% as the quarter
wore on.
We are also concerned about the apparent delay in the Palomino
chip, a successor to the Athlon, which was to be introduced in
the first quarter. That chip was important, in our view, because
it would put AMD back in the performance end of the notebook
market, which is currently dominated by Intel's Pentium 3. The
notebook segment is somewhat faster growing and more profitable
for Intel at present than the desktop market. |
