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Politics : Formerly About Advanced Micro Devices
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To: Elmer who wrote (53089)3/21/1999 1:32:00 PM
From: Kevin K. Spurway  Read Replies (2) of 1583501
 
Re: "My pleasure, but you really should be thanking Jerry."

Jerry has done his job properly. If I had told you two years ago that AMD would be selling microprocessors to every tier one except Dell, you would have laughed at me. AMD has overcome ALL of the SIGNIFICANT challenges in this area. Thanks to AMD's sales and marketing, AMD sells every chip that it makes.

Thanks to smart marketing, AMD now has kept the K6-2 to effectively "pin down" the Celeron while the K6-III goes and competes with the higher margin PIII. This way, the K6-III won't drift downmarket and become a Celeron competitor. Soon the K7 will be here, and luckily I am not worrying much about AMD's ability to sell it. I do have to worry about AMD's ability to manufacture it, though.

The failure to execute on the manufacturing side is why the company has not outperformed. There isn't very much Jerry can do about this, other than do a better job of managing investor expectations.

Elmer would like Jerry to have taken AMD out of the microprocessor business entirely two year ago, instead of going ahead with the K6. But the industries in which he'd like AMD to focus are low margin, commodity businesses. Companies in these businesses are awarded low multiples. Not a lot of possibilities there. Sure, AMD could eke out a 5% profit on 3% top line growth, but that wouldn't serve the investors very well. Far better for AMD to take on Intel and try to grab a share of those nice monopoly profits. What Elmer and Engel don't get is that K6 is only round one--did they really expect AMD to knock Intel out in just two years?

Kevin
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