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Politics : Formerly About Advanced Micro Devices
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To: wallstreetbull who wrote (26437)12/4/1997 11:58:00 PM
From: Brian Hutcheson  Read Replies (2) of 1572369
 
Sam , re. where AMD is heading over next 12 months
These are the facts , the K6 is widely accepted as a very cost effective alternate to Intel . AMD should sell all they can make .
I believe that in the .25 version the K6 is superior to Intel's offerings . The K6-3d version is even more superior .
The important question is how many can they make .
On .35 the yield is now over 50% 233mhz version
On .25 , I have reason to believe that yield is also improving rapidly. AMD's problem was never production in the past , it was having the right product at the right time .
If you take the weekly wafer capacity of Fab25 and SDC it should equate to at least 4000 wafers per week at maximum . On .25 at 50 %
yield that equates to about 180 dies x 4000 x 13 per quarter or slightly over 9M k6s per quarter.
At a blended ASP of just $150 it gives total K6 revenue of 1.35 B
and even with an ASP of $100 it would give $900 M
They will still be able to make v. good profits since analysts this year were stating that the cost of production on .25 should be under $35 .
Of course to those figure you could add revenues of $400M+ for the rest of AMD's business , giving revenue of $1.3B - $1.75B per quarter
That explains why Salomon bros and others were saying that earnings should be explosive.
What stock price would that produce ?
From the figures earnings in dollars per quarter are possible .
Judging by the overvaluation on stocks like Dell anywhere from
$100 - $200+
Of course it also depends on whether the market remains favourable throughout '98 and the P/E that the market would give to AMD .
I believe that patience with this stock will be well rewarded since it is the only semiconductor stock ( that I am aware of )that has a proprietary product which can be sold at premium prices and also has the production facilities to produce in large volumes
regards , Brian
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