Albert and all,
Thanks for all the high quality posts, earnings info and analysts notes.
My partner and I have been lurking here for quite a while. We have traded AMD a couple of times now for our partnership accounts and client accounts with nice results. We are now currently long in my personal account, the partnership account and a couple of client accounts (growth oriented).
We went long upon announcement of the TV ads. I have purchased spot TV time in a former job several years ago and I still follow some media companies. TV spending is a highly discretionary expenditure. You can turn it off or on in about a week. If they wanted to save money they could get out of their TV schedule without a scratch. They are advertising because they want to, not because they are being forced to by prior contracts.
As we figure it, they would turn off the TV ads very quick if they couldn't meet the demand. It would be very rare for the top tier chip buyers to have a contract with AMD that required 4Q TV ad support. I also have noticed a substantial print ad schedule that would be inconsistent with a company in deep, deep trouble.
The spot price on 233's at Chip merchant tells me there is a suppy / demand imbalance for sure. Stock out one day. Price rise the next.
With another top 10 and top 20 OEM comming in, it sure dosn't look like a demand problem.
Lets concentrate on the following:
1. What is the nitty gritty on the production problem? Is it the BGA at the end of the line? Mask problems? Heat? Speed? Can't we get someone in Texas to shed some real light on the production issues? Someone here lurking must have some engineering detail to share with us.
2. If and when the problem is resolved, what is the best case production level? How about the expected case production level?
3. What is the feasable range of reaction that Intel can pull when AMD production comes full on-line? We have speculated that any deep discounting by Intel would sure hurt INTC a whole lot more than AMD! But, what if INTC gets real paranoid and lays out some real down and dirty price cuts (particularly since another round of disapointment would really kick some dirt into AMD's face in light of the new Fab.)
4. Where are the AMD motherboards and K6 systems being offered? The last round of IBM Aptive ads that I see indicate "P200" processors. I read this to mean Cyrix or AMD or "IBM" or what ever they want to slap in. Ads for these machines were opposite all sorts of machines with the "Intel Inside" logo and Intel being specifically mentioned in summary tables. I want to see IBM advertise AMD K6 machines, not generic clone processors.
5. Why is FIC dragging their feet on the VP 3 chipset? What is this bulshit about "waiting to see how the market evolves"? Yes, the Intel AGP chipsets are here and now but what ???.com.tw mb maker wants to get in bed with Intel to be slapped around. I don't understand FIC's position unless its a pure corporate misinformation campaign.
Other pressing questions:
Who here will be on the earnings call? We will. Any incisive questions you would like us to get in? (Will only ask if it is a good question, reasonably within the bounds of what they will normally disclose.)
Albert - where do you get the analyst reports? We use Multex but you must have a great source for just plain old ASCII text. Multex is all postscript -- what a drag -- slow, sometimes won't print, hard to cut and paste, etc.
One thing about AMD, one way or another it does get your blood flowing.
Rick Labs, CFA
CL&B Capital Management |
