Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: Jim McMannis who wrote (32747)	5/18/1998 1:34:00 PM
From: Brian Hutcheson	Read Replies (1) of 1580668

Jim , re. your thoughts on AMD's cheaper production costs In this PC business environment with HP and others feeling the pressure on prices , AMD comes into its own . The success of IBM and Compaq with K6 sales is evident still e.g. a local newspaper last week had only K6 PCs advertised with the exception of a Cyrix PC . Future Shop (a Canadian superstore) seems to adverise mainly IBM or Compaq K6 PCs on the front page of their flyer , while Intel is tucked inside somewhere . The question is , can AMD make good profits in that environment ? If AMD can produce 2000 wafers per week with half being K6-2 at just 50% yield they will produce approx 2.6M K6 classic and 2.1M K6-2 If we assign an ASP of $110 for K6 classic and $150 for K6-2 (conservatively) then we arrive at $601M revenue for CPUs , that coupled with their usual revenue of $400 approx for the rest of their business would give $1B for a quarter . Their break even revenue is I believe around $650M-$700M , from the extra $300-$350M they should have great earnings possibly a $1 a share per quarter or more . Brian

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