John
any comments on exchange2000.com ?
below is a downgrade on amd earnings by Brown
Regards
-Albert
02:16pm EDT 6-Oct-97 Brown Brothers Harriman (Milton, W.J.) AMD INTC
AMD: LOWERING 1997 AND 1998 EPS FORECASTS
BBH BBH BBH BBH BBH BBH BBH BBH BBH BBH BBH BBH BBH BBH BBH BBH
BROWN BROTHERS HARRIMAN & CO.
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ADVANCED MICRO DEVICES (MARKET PERFORM/HOLD)
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WILLIAM J. MILTON, JR. (212) 493-8278
AMD: LOWERING 1997 AND 1998 EPS FORECASTS
EPS ANNUAL P/E Dividend
Price ---------------------- ------------ ----------- 3-Yr. 52-Wk
10/3 12/96 12/97E 12/98E 12/97 12/98 Rate Yld. Grwth Range
--------- ------- ------ ------ ----- ----- ----- ---- ----- ------
AMD $29 13/16 ($0.51) $0.09 $2.10 NM 14.2 $0.00 0.0% NM $49-14
1997 Q1 $0.09A Q2 $0.07A Q3 ($0.21)E* Q4 $0.14E*
1996 Q1 $0.18A Q2 ($0.26)A Q3 ($0.28)A Q4 ($0.15)A
* represents change in estimates
We are lowering our Q3 EPS forecast from ($0.02) to ($0.21) and our Q4
number from $0.29 to $0.14, which brings our full-year 1997 estimate from $0.43
to $0.09. We are also reducing our 1998 projection, from $2.35 to $2.10.
AMD's warning last week of a substantially greater loss than earlier
expected for Q3, due to lower-than-anticipated wafer yields for the K6
(specifically the 233-MHz part, a consequence of which undoubtedly was to
adversely affect the MHz mix and to push ASPs somewhat lower than they otherwise
would have been), leads us to the conclusion that the gross margin on the K6
family must have dropped into the high-20s% in the quarter, from our previous
estimate of 34%. We are assuming that some of the production difficulties have
spilled into the current three-month period, which will keep the gross margin
from rising above the mid-30%s despite a probable jump in K6 output to two
million units from an estimated one million in Q3.
Regarding 1998: Advanced Micro should be able to generate a gross margin
of about 50% on the K6 at higher unit production levels (Intel is above 60% on
its processors), but we'll be more conservative in our model by keeping the
margin below 40% through Q1 1998, then gradually increasing it through the year,
topping out at 48.5% in Q4.
There is still some risk at our lower level of expectation, as the company
will be shifting in earnest to a 0.25-micron process this quarter and next,
raising the possibility of further production disruption; also, the firm will be
moving up the MHz scale through next year, which could present additional
manufacturing challenges.
AMD reports Q3 results tomorrow after the close. In the conference call
that follows there will be some management comment on the wafer-yield problems
and some income-statement guidance for Q4. We will have more to say at that
time.
AMD is rated Market Perform/Hold.
INTC-$93 5/16-Market Perform/Hold |
