Hi eplace:
With those numbers, throw in another $90,000,000 for "communications and other" and you break that $1 billion barrier for 99Q4! (And some here accuse me of hyping!).
In all seriousness, your numbers are likely to prove closer to reality than those of the AMD naysayers in our midst!
Events over the past 6 months indicate an extremely undervalued price at $31. I can't identify any other potential high growth vehicle that is trading at 15 times estimated y2000 eps (and $2.00 is the most conservative eps
for Y2000 that I can derive based upon the past 6 months indicators), which even at the risk of offending some here may be worth repeating one more time:
1. Remarkable turnaround: Less than 5 months ago, after the release of 99Q2 earnings (-$1.28?), for that matter after release of 99Q3 earnings (-$0.72), the suggestion of the possibility of a breakeven 99Q4 would have been met with derision, at best, by most. Absolutely remarkable turnaround is being witnessed here! This remarkable turnaround is not only coincidental with the introduction of the Athlon, but, contrary to the opinions of some here, a direct result of the introduction of the Athlon.
2. Architecture of the Athlon: The ease in moving up the MHz gradient (from both a production and incremental cost perspective) from 500 to 750, particularly when compared with competitors' difficulties in keeping pace, as a positive indicator of exceptional architecture, can only be downplayed by those with a counter-AMD agenda.
To quote the December issue of Maximun PC: "With its new processor, the Athlon, AMD is sending a clear message to Ixxxl loyalists. The party is over".
3. Athlon Implementation: From its inception in June '99 to 200,000 units shipped in 99Q3, to 800,000 units (minimum) shipped in 99Q4 and projected 9.6 million for Y2000 reflects an outstanding implementation plan. If AMD ships 10 million Athlons in Y2000, assuming $250 ASP, Y2000 Athlon revenues (i.e. $2.5 billion), alone, will exceed Y99 revenues...that's a lot of revenues to offset associated costs! hmmm, maybe even with some (significant?) profit left over!
4. Flash Memory: As some here are quick to point out, AMD's flash memory is highly profitable. With a shift of MPU production to Dresden additional capacity is available in Austin to support management's anticipated Y2000 flash memory growth of 70% qtr. to qtr., which if successful, will contribute $2 billion in revenues in Y2000, twice that of Y99.
5. Infrastructure: With the perfect timing in bringing Dresden on line, production capacity will exist for not only the 10 million Athlons and 15 million non-Athlons, but also, in Austin, for the dramatic growth expected in flash memory. (Flash expansion costs will be mitigated by the fact that existing fab space is available in Austin with the shift of MPU processing to Dresden).
6. Tax Losses: AMD has accumulated sizeable tax losses against which most if not all Y2000 profits can be offset. (Accountants in our midst would probably know the specifics). As a result, Y2000 before tax earnings may closely approximate Y2000 after tax earnings.
7. Positive Trends: All indicators point towards the continuation of the positive trend experienced by AMD over the past 6 months, throughout Y2000. Given the shipping of 10 million Athlons, 15 million non-Athlons and a doubling in flash production revenues, Y2000 revenues of $5 billion (a doubling!!! of Y99 revenues)cannot be considered wildly optimistic but may, if achieved, deliver wildly improbable, (from today's perspective) Y2000 profitability! (Rental revenues from Dresden and sales proceeds from Communications division can only improve an already rose-coloured Y2000).
Call the foregoing...hype, self-serving optimism, call it exagerrated bullishness, call it used car salespitch, call it f--tbreathing, call it a rose-coloured viewpoint, call it whatever reflects your own motivations for whatever you label it...
Imho, I'd call the foregoing a realistic assessment of what has evolved in the past 6 months and a projection thereupon!
If some find that offensive, perhaps they should reassess their own assumptions and motivations!!! |
