Dear Paul:
Reading comprehension slipping again?
If AMD's assumptions are true, Intel loses both in terms of revenue, market share and becomes negative in profits. That is the pessimistic scenario (price war continues, flash, and all else takes a 50% hit in revenue (a $600 million loss in Other revenue also means a $600 million increase in Other losses) giving IAG a reduction of $600 million in sales all to the bottom line). A $1.2B hit in net income before taxes is a $900M hit in after tax or a loss of $680M or about $0.10 a share. That's more than AMD would have and would wipe out profit for YTD 01 for Intel, not AMD.
Given Intel's rosy assumptions, Other is flat, flash recovers somewhat, and CPU unit sales increase. Price war is off, thus ASPs are stable for both. Intel sees flat revenue and $0.03 EPS profit, but AMD sees higher ASP, higher sales and flash stable (no further reductions) leading to after tax profits in the $100M or $0.30 EPS range.
Now I rather have the rosy assumptions to be true. However, if you like the pessimistic ones more, you should realize that Intel suffers far more than AMD. Given Intel's actions though, and those tell what Intel really thinks instead of what they say, the pessimistic ones are more likely.
Pete |
