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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 205.08

+1.0%

9:38 AM EST

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To: Mani1 who started this subject	6/8/2001 4:38:21 PM
From: AK2004	Read Replies (1) of 275872

What is this bit about ibm's "strained silicon"? I am sure intel thinks that is totally unneeded since it was not made by intel.... 11:55am EDT 8-Jun-01 Merrill Lynch (T.Kraemer (1) 212 449-7140) IBM 6680 IBM.N INTL BUS MACHS: Another IBM Breakthrough in Microelectronics ML++ML++ML Merrill Lynch Global Securities Research ML++ML++ML INTL BUSINESS MACHINES, INC. (IBM/NYSE) Another IBM Breakthrough in Microelectronics Thomas Kraemer (1) 212 449-7140 NEUTRAL* Long Term: BUY Reason for Report: Company Update Highlights: o IBM announced "Strained Silicon" today; a new breakthrough in microelectronics that the company believes can decrease power consumption and increase chip speeds by 35% without shrinking the size of the transistors and without requiring any significant changes to existing manufacturing processes. o This is the latest in a number of advances in microelectronics by IBM in the last few years that includes copper, silicon-on-insulator, silicon germanium and low-k dielectric. o This announcement does not provide any near-term upside to revenue or earnings since the technology will not be included in products until 2003. However, we view this announcement as another example of IBM's technology and intellectual property leadership in microelectronics. o Microelectronics is one of the shining stars of the IBM product portfolio. By our estimates, microelectronics revenue exceeded $4 billion in 2000 and will grow by approximately 46% in 2001 (contributing nearly 30% of the overall revenue growth for 2001). o We are encouraged by the fact that IBM continues to bear the fruit afforded by its world-class R&D organization. Price: $117.25 Estimates (Dec) 2000A 2001E 2002E EPS: $4.44 $4.87 $5.43 P/E: 26.4x 24.1x 21.6x EPS Change (YoY): 9.7% 11.5% Consensus EPS: $4.84 $5.48 (First Call: 31-May-2001) Q2 EPS (Jun): $1.06 $1.15 Cash Flow/Share: NA NA NA Price/Cash Flow: NM NM NM Dividend Rate: $0.53 $0.53 Nil Dividend Yield: 0.5% 0.5% Nil Opinion & Financial Data Investment Opinion: B-3-1-7 Mkt. Value / Shares Outstanding (mn): $204,132.3 / 1,741 Book Value/Share (Mar-2001): $12.05 Price/Book Ratio: 9.7x ROE 2001E Average: 41.0% LT Liability % of Capital: 58.0% Est. 5 Year EPS Growth: 12.0% Next 5 Year Dividend Growth: 12.0% Stock Data 52-Week Range: $134.94-$80.06 Symbol / Exchange: IBM / NYSE Options: Chicago Institutional Ownership-Vickers: 50.8% Brokers Covering (First Call): 15 *Intermediate term opinion last changed on 20-Dec-2000. For full investment opinion definitions, see footnotes. Strained Silicon IBM announced a new breakthrough in microelectronics today that the company believes can decrease power consumption and increase chip speeds by 35% without shrinking the size of the transistors and without requiring any significant changes to existing manufacturing processes. The new technology called "Strained Silicon" allows for electrons to flow the microchip with less resistance by stretching the atoms in the silicon. This is the latest in a number of accomplishments by IBM's microelectronics research engineers that include advances in copper, silicon-on-insulator, silicon germanium and low-k dielectric. Since this technology is not expected to be included in products until 2003, we do not expect this announcement to provide any revenue or EPS upside near-term. However, we view this announcement as another example of IBM's technology and intellectual property leadership in microelectronics. Microelectronics is one of the shining stars of the IBM product portfolio. By our estimates, microelectronics revenue exceeded $4 billion in 2000 and will grow by approximately 46% in 2001 (contributing nearly 30% of the overall revenue growth for 2001). This breakthrough gives us increased confidence that IBM can achieve the 34% revenue CAGR for microelectronics assumed within our residual income valuation model.

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