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

To: SteveC who wrote (107319)	4/22/2000 1:40:00 AM
From: Charles R	Read Replies (1) \| Respond to of 1572893

Steve, <Long term though, I certainly do like that AMD is forecasting production 31.8 million Athlons in 2001. It's scary to think what the upside potential for AMD's earnings in 2001 if Athlon continues to excel and everything else stays stong, maybe $12 a share (and that is taking into account taxes & Dresden depreciation). > Well, I can conjure up a lot more scarier situations. For example: Wilamette ramps beautifully and AMD flounders under pressure bringing their average prices back to the $60-70 range. At that rate 30+ million processors can be shipped and EPS may not exceed a dollar for the whole year. I am not saying that will happen but I am saying all the rosy numbers being thrown around assume the good times continuing to roll. ("good times" defined by pathetic performance by Intel, supply constrained environment in CPUs and Flash). It was not long ago that Intel was losing money on flash and AMD was barely breakeven. This is tough business: I have seen fortunes being made and lost in one semiconductor cycle - many times. <The slow global PC growth forecasts for 2000 have turned out to be worthless. The whole world wants to get on the Internet, and for the next couple of years they'll be logging on with PCs. With quality laptops now close to $1,000, many people in the U.S. are going to get one as a second home PC. I think sub-$1,000 laptop sales will explode during the 4th Quarter 2000 with AMD chips gaining the lion share of the market.> In hindsight, I think a lot of this boom is being driven by companies and individuals converting the funny money in the internet stocks to pay for goods and services. I will not be surprised if we experience a serious downtick in the business as some of these valuations disappear. <Finally, does anyone think Intel really does have the capacity to produce higher speed Celerons now?> The latest move to not pursue higher speed Celerons indicates: a) either Intel saw huge uptick in demand, wisened up and realized that there is no point making Celerons when it can make more money by selling PIIIs b) or the manufacturing problems are very severe and Intel is desperate to save Q2 <It would have been dumb to flood the market with equally fast Celerons given AMD is already maxed out -- Intel would have only been undercutting its own profit.> Yes. True. Now, I hope AMD will do the same and stop new K6-2 waferstarts and increase Athlon waferstarts. <Intel does lose some revenue, but maintains its overall price structure and keeps its ASP high. > Intel gains a lot in the short-term but loses a LOT more in the long term: Intel over the last year has been creating a reputation as an arrogant, unreliable supplier playing technology catchup. Some of the OEMs who got jerked around by the cancellation of the new Celerons will be considering Spitfire a lot more seriously. Chuck

To: SteveC who wrote (107319)	4/22/2000 11:57:00 AM
From: Amy J	Respond to of 1572893

Hi Steve, RE: "Microsoft: Intel's numbers were underwhelming but at least it put a positive spin on the remainder of 2000. Microsoft displayed much more than its usual caution" -------- Microsoft reported "low" quarterly revenue growth for the Windows Group: only 14%. Sales to OEMs grew 5% YOY. Specifically, demand for Win desktop OS was "moderate" (IMHO low) due to soft business PC demand through the OEM channel. I believe some buyers will wait for the Win2000 upgrade/tools - Win2000 has a longer deployment cycle. Everything else (Apps & Internet) was fine. Win2000 reportedly is off to a "solid start." So, where's the problem? A: There was a shift to (overall) lower priced WIN OS reflecting a softness in demand for business PC (as oppose to consumer PC) for WIN OS through the OEM channel, resulting in a 5% YOY OEM revenue growth. Lower win rev/license. Yet, Win2000 (both Professional & Server) had better than expected retail sales. This could be a forward looking indicator of the OEM sales, which are currently on the weaker side. Transitioning to Win2000 takes time (summer upgrade, tools, active directory, etc.) How does Microsoft's claim of soft business PC demand relate to Intel, AMD, and Dell who experiencing high PC demands? This sounds familiar to me? 1995? But the 5% YOY rev increase on OEM revenue does not sound familiar, nor good. A range of possibilities (as to why OEM rev growth was only 5%): - Low corporate sales, but high consumer sales (most likely scenario) - PC purchases delayed until win2000 upgrade & tools are available? (most likely scenario) - Intel shortage is (reportedly) impacting and limiting Microsoft's growth (i.e. lower priority pc makers could be set aside by chip makers, leaving MS somewhat limited on incremental OS sales) - Linux? (no, not yet) - Y2K? (yes, a little bit of this) - Laptops encroaching on PC business demand? - a change in the OEM contracts? Other areas were fine: Channel: PacRim 32% Asia 44% (real 32%) unusually strong, like Intel said Europe 28% OEM 5% (the concerned area) Products/Services: Win 14% (the concerned area) Apps 32% Internet 26% Overall: EPS 23% Rev 23% Regards, Amy J