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Politics : Formerly About Advanced Micro Devices

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To: Jim McMannis who wrote (30597)	3/31/1998 12:05:00 PM
From: AK2004	Read Replies (1) of 1570798

Jim, All - BA upgrade 08:39am EST 31-Mar-98 BancAmerica ...... March 31, 1998 A D V A N C E D M I C R O D E V I C E S Q1 EPS is Terrible but Dramatic K6 Yield and Speed Improvements; 100% 0.25 micron wafer starts expected by Q3; Raising rating to Buy ..................... Key Points: The following is a written follow-up to comments made yesterday. Based upon discussion with several sources in the industry, we believe that AMD's yields on 0.35u have increased from 50 to 100 good die per wafer with early 0.25u wafers yielding 200 die out of a possible 350. Importantly, we expect 100% 0.25u wafer starts by early Q3. Bin splits as a result of the improved yields have also increased to about 266 MHz with 350 MHz possible during the next several quarters. This should also help stabilize K6 ASPs, which are below $100 this quarter. The net result is that AMD should be able to produce 13-15 million units in 1998 versus our current forecast of 11 million units. The only question now is demand but we note that AMD has 5 of the top 10 manufacturers with products using AMD processors already including IBM and Compaq. ** We expect the EPS loss in the quarter to be closer to $0.35-0.40 versus our $0.24 loss but believe profitability could now be achieved as early as Q2/Q3 versus our Q4 forecast. We are raising our rating to a Buy and believe that the stock could trade in the low $30s based purely on production improvements. Demonstration of sustained competitiveness versus Intel should take the stock much higher. Time will tell. ..............

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