Mark, All
It is not clear yet -- read below
Regards
-Albert
08:53am EST 12-Feb-97 Lehman Brothers
...
In brief, AMD's CFO (who has a well deserved reputation for
conservatism) indicated the inventory correction has ended,
mainstream business is on a steady increase, and AMD has a
major upside opportunity in microprocessors (MPUs). The MPU
opportunity currently appears on track
.....
KEY POINTS (NON MPUs). In the nearly 80% of AMD's business
which is not MPUs, demand is good. Units are rising and pricing
has become reasonable. Based on the recent value put on Fairchild,
AMD seems to concur that its non-MPU business is worth $14-20 per
share; the current trading premium represents a call on the MPU
opportunity
.....
KEY POINTS (MPUs). MPUs now account for just $110 mil. of 4Q96's
$497 in total sales, but that could mushroom to as much as $500 mil.
-- $750 mil. per quarter during the next 18 months. AMD notes that
it has introduced one K5 speed upgrade per quarter, now is shipping
K5-166s, and, we presume, will soon have K5-200s. K5 units look
likely to rise from 4Q96's 1.1 mil. to perhaps 1.5 mil. in 1Q97, in
line with our models; pricing could move up more than the 10% we
anticipated due to improved mix. AMD suggested 3-5 mil. K6 units
at roughly $200 apiece in 1997 is a reasonable range, and our model
is at the low end of that range. AMD's "stretch" goal in 1997
remains $1.0 bil. in K6 sales (our model: Just over $600 mil.).
AMD anticipates high profitability on any volume gains. AMD
confirmed that K6 silicon has been committed. AMD believes it
is on target to ship several 100K K6s 2Q97. AMD notes the K6-200
it demo'd in November at Comdex beat a Pentium-Pro-200 by about
10% running NT; AMD believes its K6 would have compared substantially
better running Windows 95. 0.25 micron K6s will be available in late
1997. Importantly, AMD believes it has capacity to take 30% of MPU
unit volume (15% or more of dollar volume): Fab 25, solely dedicated
to MPUs, can run 6K 8" wafers/week at 0.35 microns, 5K 8" wafers/week
at 0.25 microns. AMD SEES THE POTENTIAL TO SHIP 20 MIL. K6s IN 1998,
BUT OUR MODEL INCLUDES JUST 11 MIL. (3 MIL. IN 1997, 0 IN 1996). If
so, that would easily add $1.50-2.50 to our $2.90 1998 EPS projection
.....
Die Tran- Min. Inter-
Size sistors Feature connect
INTC- P55C (Pentium MMX) 140 mm. sq. 4.5 mil. 0.35u 4 metal
P6-Pro 196 mm. sq. 5.5 mil. 0.35u 4 metal
P6-Klamath 200 mm. sq. 7.0 mil. 0.35u 5 metal
AMD- K6-Catapult 162 mm. sq. 8.8 mil. 0.35u 5 metal+local |
