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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 213.43+6.2%Dec 19 9:30 AM EST
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To: Road Walker who wrote (46421)7/6/2001 4:06:19 PM
From: Charles RRead Replies (3) of 275872
 
John,

<I can't think of anyone that has been long term successful in the microprocessor business, large or small, except Intel. >

Couple of things:
- You are answering the wrong question.
- You seem to be starting with an assumption that Intel can't ever be beat which may be a bad assumption in the sense that AMD has demonstrated that it can beat Intel at product innovation at least for a short while. The question now is that of consistency. Can AMD release the next processor with a resonable amount of time?

<I just don't see how AMD can compete if they start to lose money. >

By gaining market share? Excuse the flippance but it seems to me the importance of gaining market share hasn't sunk into you.

For AMD to not be crushed by Intel in the future, AMD needs to keep gaining (or not losing) market share. Keep in mind that EPS and accounting losses are financial artifacts. It is possible for AMD to cut down on capital spending and conserve cashflow until they are certain the next CPU core is a winner. If AMD does that, AMD can wage a price war as long as the revenues stay above $800M (which, assuming flash doesn't get much worse, means AMD can take another $10-$15 hit to ASP at the current unit level or even lower ASPs at an increased unit level).

If AMD can't win market share and make money then they might stop making CPUs and make easy money by collecting royalties by licensing IP to Intel and rest of the industry.

Scary thought, eh?

Chuck
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