Advanced Micro Devices - Moderated (AMD) Message Board

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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 203.14

-0.8%

3:59 PM EST

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To: tejek who wrote (48572)	7/22/2001 12:01:03 AM
From: kash johal	Read Replies (3) of 275872

Ted, re:"You need to add to the list that Sanders achilles heel is starting to show. He is fighting a pricing war to gain market share when AMD is not in the strong position. Dell, exclusively supplied by Intel, not AMD, is the only pc maker that is truly growing its business right now and that's by grabbing market share from the others. Sanders needs to retrench right away, give up share [if necessary] and batten down the hatches until the storm is over. But he won't do that and AMD will suffer because of it. We will know how bad things really are when AMD gets closer and closer to its 52 week low. If it stays above $13.56, or if $13.56 holds, then things are expected to improve soon. If it goes below $13.56, the sh*t is about to hit the fan." Well i disagree. The semi business is very fixed cost/capital intensive. AMD has two options: 1. Retrench back to 10-15% share. This will involve shutting down some fabs such as Fab 25 and some flash fabs. This will mean HUGE one time special charges. But likely modest profits going forward. 2. Fight out for market share. Get to 30% and hope market turns by early 2002 enabling higher margins. They have clearly chosen option2. Unfortunately if things dont turn around they could start losing $200-300M/qtr (imagine 15M units/qtr at ASP of $50 average). If market and product mix doesnt change they could be in a world of hurt. AMD has 2 legs: Flash - is now money losing. CPU's- modestly profitable is about to go negative. As far as stock price i can see a sub $10 stock price easily as the low if things don't turn before next year. And a test of $6-7/share (in worst case scenario) would not shock me.

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