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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (61555)	6/12/1999 10:24:00 AM
From: Charles R	Read Replies (1) \| Respond to of 1572946

Tejek, "They attributed the increased loss to the aggressive ramp up of the k-7 rather than the inability of amd to move their k-6 inventory. " Glad you bring this up. There has been a lot of misinformation about inventory and there still continues to be. There is no indication that AMD is sitting on any large amount of inventory. The issue as far as I can tell is ASPs. Looks like National is sitting on beaucoup inventory and will sell it at very low ASPs (sub $20 bucks wouldn't surprise me for PR366 and below) and Intel is being more aggressive than forecasted. Its tickles me pink to think that people are more concerned about ASP impact on AMD than Intel. The logic of this is beyond me. Laws of economics tells that price erosion benefits lowest marginal cost supplier and people shouldn't have too many doubts about marginal costs of K6-2 and Celeron. AMD has moved a lot of the production to K7 - a higher risk venture but, when they takes the kinks out, a very profitable one. The problem is AMD's track record has been such, they probably wouldn't have done this if they were not forced into this by Intel's pricing tactics (I am referring to the strategy of cheap CPUs upto the speed range AMD can offer and insane $s/MHz above speed grades that AMD cannot offer). Keeping the low-end pricing about the same but using a more linear pricing pricing up the MHz chain would have helped the quarter for AMD and Intel but this rationality doesn't seem to appeal to Intel. Well, guess what! Once AMD's risk pays-off, Intel will likely see the results of their own actions. For this Q, the aggressive K7 ramp will be taxing AMD because of the need to supply a slew of brand new CPUs and chipsets. Indications are that everything is going smooth but AMD is operating in an environment where they have little margin for error. I find Mosesmann analysis interesting (forecasts more K7s than any analyst but has a hold at $14!) and think that he may have come further off the earnings estimate than he ever was. Assuming no setbacks on the operation side, he may be instrumental in increasing AMD's credibility when the numbers come out. And, boy, doesn't AMD need some boost to their credibility! Good luck, Chuck