WBMW,
Analyst Hans Mosesmann, in a research note, said he believes that the current demand strength is more related to Intel P4 shortages rather than true demand for the Athlon XP.
``P4 shortages are likely to abate in the first quarter and will likely lead to market share losses and/or average-selling-price pressure for AMD for the next several quarters,'' he wrote. ``While we believe AMD has the smallest processor die sizes and excellent price/performance, our concern is in the company's likely inability to control its processor pricing segmentation model.''
So, Mosesmann's key premise is that when Intel gets over the P4 shortage problem, and with the "300 MHz to 400 MHz clock speed advantage the P4 architecture has over the Athlon XP for the next several quarters", that XP sales kind of dry up. Next, AMD has to cut prices to continue selling, ruining ASPs again. He has done some homework because he mentions:
1. "While we believe AMD has the smallest processor die sizes and excellent
price/performance,...
2. "Traditionally, the success of an x86 architecture in the market is highly
correlated to clock speed, as was the case with AMD's K7 (the first Athlon) when
compared to Intel's PIII in 2000 and early 2001."
3. "As we exit 2001, we fully expect the current shortage of P4
processors to abate and thus lead to either material market share losses for AMD
and/or margin pressure as a result of ASP declines. This should also be valid
in an environment where Intel's blended ASPs can start to increase starting in
early 2002 given that the low end of Intel's P4 pricing structure is what
directly impacts AMD's overall pricing. We found confirmation of this dynamic
in Asia last week when we visited major motherboard and other companies
throughout the technology food-chain which indicated that AMD products will
likely be used less often as Intel product becomes more available."
Excerpts from Albert's post on AMD Mod thread.
Hence we are downgrading the shares to Sell from Hold and maintain our 12-month
price target of $10.
Not even an on-time Hammer gets it off ten bucks?
Intel (INTC--$34.08; Buy)
Keeps a BUY rating on Intel at $34.
Tony |
