Pravin
here it is, I wonder what the problem is and how reliable the info
Regards
-Albert
04:30am EST 29-Nov-01 J.P. Morgan (Eric Chen, Ph.D.) AMD AMD.N
1 of 2 AMD: We believe there may be difficulties in its 0.13um ramp
**** JP Morgan/JP Morgan H&Q **** JP Morgan/JP Morgan H&Q ****
Company: Advanced Micro Devices
Price: 13.21
Recommendation: Long Term Buy
Notes: f
Analyst: Eric Chen, Ph.D. 415-439-3210
Date: 11/29/01
1 of 2 AMD: We believe there may be difficulties in its 0.13um ramp
* We believe that AMD (AMD/$13.21/LTB) might be experiencing some difficulty
stabilizing its 0.13um process technology for volume production ramp. Thus,
the original plan to sample 0.13um Athlon processors in Q4C01 and volume ramp
in Q1C02 might be at risk.
* The potential pushback of the volume ramp may bear incremental negative
impacts on gross margin and market share. It could potentially further weaken
the competitive position of the company, with regard to both cost and
performance.
* We do not believe this would result in meaningful downside for the current
quarter, but it does bring some risk to the companies financial performance in
Q1C02, or even longer depending on how quickly the company can resolve the
process issue.
* AMD shares are up 62% from their September low, versus SOX up 37% and NASDAQ
up 26%. We recommend investors trimming positions, despite the relative value
in the share price. Maintain Long Term Buy rating.
2000 A 2001 E 2002 E
Q1 EPS $0.58 $0.37 $(0.26)
Q2 EPS 0.61 0.05 (0.23)
Q3 EPS 0.64 (0.28) (0.16)
Q4 EPS 0.53 (0.29) (0.09)
FY EPS 2.37 (0.15) (0.74)
FY REVS (M) 4,644 3,706 3,020
CY EPS 2.37 (0.15) (0.74)
CY P/E 5.6 NM NM
FY Ends Dec Current Price $13.21
52-Week Range $34-7 Market Cap (M) $4,515
Shares Out (M) 345.0 Book Value $10.52
Net Cash/Share $2.62 3-Year EPS Growth NM
CY01 P/B 1.26
We believe that AMD is experiencing some difficulties in stabilizing its
0.13um process for volume manufacturing. At its analyst day on November 8,
2001, AMD stated a plan to sample 0.13um Athlon XP in Q4C01, to start shipping
products in Q1C02, and to complete the 0.13 conversion of Fab 30 by the end of
Q4C02. We believe AMD might have to push back the schedule of volume
production of Althlon products on 0.13um. The potential delay could have an
incrementally negative impact on AMD''s gross margin and CPU market share in
2002.
The technology conversion to 0.13 micron is expected to reduce the
manufacturing cost, thus boosting gross margin. We believe the conversion to
0.13um from 0.18 um may trim down the die cost by 20% to 25%. Under this
assumption, the conversion of Fab 30 should improve AMD''s average die cost by
7% to 9%, as Fab 30 provides approximately 35% of AMD''s total wafer capacity,
according to the Strategic Marketing Associates. However, the potential
positive impact on the gross margin should be less than 7% because costs
associated with logistics and distribution are not scalable. If AMD indeed
has to push out its Q1C02 shipment schedule of the 0.13um Athlon XP chips, we
expect the projected gross margin to come down a few percentage points in 2002. |
