The transition to a 32/64-bit computing environment is upon us and, my guess is, that the primary constraint in this transition will be the production constraint!
A. "Looking to the end of this quarter I have trouble seeing revenues from CPUs of less than $700 million (and it could be a good deal more). Revenues from phalasch and everything else will almost certainly exceed $500 million . So, AMD is going to show significantly over $0.50/share pretax operating earnings this quarter."
Nothing too contentious in your analysis from my perspective. Heck, AMD's q/q rev growth from $825 million to $954 million is 15%, with both "Opteron-family" and MirrorBit just getting stoked up! It is not difficult to imagine q4 revenues of ($954 million x 1.15) + $100 million in incremental "Opteron-family" revenue as A64 rollout ramps up...Not too surprisingly, such a calculation arrives at $1.2 billion in q4 revenues and $0.57 pre-tax eps, in the same ballpark as you!
But the real fun begins in FY04, in the midst of a very, very healthy 6% to 8% economic recovery resulting in much scrambling by businesses to keep inventories, which are currently at historically low levels from depleting, owing to the GNP explosion which will have caught everyone by surprise with its stealth arrival!
It is within such an economic environment that AMD's revenues will expand by 20% or better per quarter (fueled by 4x factor associated with the A64 rollout and accelerating MirrorBit revenues throughout FY04)...Such a scenario results in q1 thru q4 revenues of $1.2, $1.55, $1.8 and $2.0 billion revenues/q or $2.55 billion in pre-tax FY04 profit or an pre-tax eps of $7.00/sh in FY04!!! (I hope TGPTNDR is reading, cause in this best of all world outlook, $1 billion in FY04 profit does look mighty conservative!)
It's probably worthwhile revisiting the 5 year chart here:
finance.yahoo.com
as, in the above scenario of exploding FY04 profitability, one might expect stock price appreciation over the next 9 months, from Nov '03 to Jul '04, similar to that which occurred between Nov '99 to Jul '00 when AMD shares ran from $10 to $48.50!
B. "Things may get much more exciting for inteL. iTs server cash cows are going to start to vanish. It is also going to start to lose the high end of the consumer market. inteL is not geared for the lean times that it is going to encounter."
INTC will be able to mask much of their competitive difficulties owing to an exploding economy. DEll may have more difficulty masking theirs, though as, in FY04, increasingly the consumer tune that we will be hearing is:
If you're not selling A64 (hybrid) computers, you're not selling computers!
There is just no way that a consumer will purchase a 32-bit only computer in FY04 when the A64 hybrid is available as an option! If Dell chooses to peddle only fast obsoleting 32-bit only computerware, the consumer will walk from Dell and find a vendor who will satisfy their purchase need!
The transition to a 32/64-bit computing environment is upon us and, my guess is, that the primary constraint in this transition will be the production constraint! |
