Advanced Micro Devices - Moderated (AMD) Message Board

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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 212.11

+2.9%

10:37 AM EST

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To: Sarmad Y. Hermiz who wrote (189530)	3/13/2006 2:20:20 PM
From: Petz	Read Replies (2) of 275872

re: In my opinion 5-10% across the board [Intel price cut] will be more than enough. Such a price cut would reduce Intel's revenues by almost as much as the price cut, without reducing expenses at all. (Some OEMs might buy the next highest speed grade, that is why revenues don't drop quite as much as this hypothetical "everything" price cut. So a 10% price cut would cause Operating Profit to drop by 7% of $9.5B. That's $650M and $0.09 of eps after taxes. Considering that the average estimate is only $0.23, that's quite a penalty to pay, don't you think? Will OEM's cut prices by the full amount of the price reduction? No Will a $10 drop in PC price stimulate demand for Intel-based PCs? Yea, probably 1/2 of 1 percent. Will HPQ or another OEM change their Intel/AMD product mix as a result? For that tiny difference, no, and it would take them 6 months. And your average Intel $140 CPU (after $10 ASP cut) will still be quite a bit outperformed by your average AMD $100 CPU. Petz

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