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Politics : Formerly About Advanced Micro Devices

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To: Jim McMannis who wrote (46378)	1/17/1999 12:46:00 PM
From: Paul Engel	Read Replies (1) of 1571928

McMannis - Re: " All Jerry and the boys had to do was say that ASPs were going to be lower " They did. Petz made the post right here. Erika Klauer picked up on it - of course she's as a dumb as a fence post and RAISED her estimates ! Paul {=======================================} To: Scumbria (43548 ) From: John Petzinger Wednesday, Dec 16 1998 5:02PM ET Reply # of 43571 I think this correction in AMD may be over. A brokerage report (thanks, Albert) by Erika Klauer of Alex Brown yesterday broke the news that AMD's average selling price for Q4 might be less than Q3, but that volume may exceed the 4.7M target. The ASP for November probably averaged only $85, IMO and the volume of 366's, 380's and 400's is too low to make it up in December. The report concludes as follows" The financial impact of these events is likely to be small. We suspect that revenues may be a bit higher than we thought while margins may be a bit lower. Still, EPS are likely to be a bit better than expected due to the higher revenues. We also suspect that AMD will hold an upbeat conference call given what we see as the exciting plans the company has in store for 1999. The company's product road map looks excellent and we suspect that new product introductions are running on schedule. Our 1999 EPS estimate remains unchanged at $1.25. AMD stock is still likely to move higher over the next 6-12 months, in our opinion. We would not be surprised to see the stock rest here to digest the news of an ASP decline in the quarter but we see limited downside risk to the $27-28 range. However, we also believe the next catalyst to move the stock even higher into the mid $30s could come as soon as the second week of January, when the company should report strong earnings and a good outlook for the first quarter and 1999. We are also waiting for more design win announcements further proving excellent acceptance of the K6 microprocessor. Our investment rating on the shares remains "strong buy." Based on this, and Katmai's relatively weak benchmark performance and weak roadmap, I repurchased the Jan 27.5 calls I had sold as a hedge on my AMD investment. I am now happily and totally "long" AMD. (It was a relatively poor hedge, having sold (tpp soon) at 3 and repurchased at 2-7/16.) Petz

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