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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: hmaly who wrote (14008)	10/15/2000 11:51:05 AM
From: niceguy767	Read Replies (1) \| Respond to of 275872

hmaly: "they are totally ignoring AMD's strong points, which if you look at the numbers,outweigh the bad." Comment: Agreed...AMD's flash division in Y2001 looks like a given, and a fairly profitable given... Any AMD uncertainty revolves around the projected performance of the PC Division in Q4 and throughout Y2001. At $22, the market (or is it some dark invisible hand) is saying that AMD will miss, by a wide margin,its targets of 7.6 million Athys in Q4 and an average 9 to 10 million Athys per quarter in Y2001...Given the Athy's price/performance edge at all MHZ speed grades over the competition, the challenge, although formidable, is within reach...all the more so if AMD is successful in increasing demand in the 1 gig plus niche where little in the way of competition resides...AMD's Q4 target is about 20% of the 45 million PC's to be sold or 8 to 9 million...I'm assuming AMD's three Q4 target ranges are 800 MHz and under, 1 gig and under and over 1 gig...The unanswered question remains what ASP will be required to meet the targets...Obviously, once again, at $22, the market is saying "scorched earth" ASP pricing will be required for AMD to reach 7.6 million Athys in Q4...As AMD is now in the enviable position of being able to subsidize prices in the lower MHz ranges by top end (1 gig and over) sales, (a successful strategy option utilized by INTC for many years, but no longer available to INTC), "scorched earth" pricing will probably not be required to achieve the Q4 target...In fact, it is conceivable that demand for Duron's and 1 gig and up Athys could increase, owing to their superior features, to the point in Q4 where not only is the 7.6 million Q4 target surpassed but in a climate of overall rising ASP's for AMD, in which case, the Hale-Boppers will have to invent a whole new AMD "lethal list" for Y2001... Note: It is important to understand that the fundamental laws of economics cannot be supplanted by dark "invisible hands" for prolonged periods of time... 1. AMD's Athlon is superior architecturally to INTC's Piii and much more readily scaleable. Economics dictates that the market will buy the superior product, particularly if at a competitive price. Economics dictates that the market share erosion which is just beginning will escalate dramatically over the next year unless INTC comes up with a competitive new core deliverable in retail quantity(and school is very much still out in this regard)that allows them to compete effectively in the 1 gig and over niche... AMD, with its superior and readily scaleable Athy, the recipient of any number of prestigious awards, is clearly holding a very powerful hand...Despite the litany of the negative Hale-Bopper concerns raised with each record breaking quarter over the past year, AMD has delivered significant profitability...proof that the laws of economics do work as AMD currently holds the leading edge technology in both of its divisions, leading edge technologies that underly the strongest product lineups in its history...This company can easily support a trading range of $50 to $150 based upon current strengths...Anything outside that range is an aberation if based upon financial benchmarks applied to any company in the semi sector, the most basic being, eps multiple equal to or greater than projected growth rate...With a conservatively projected growth rate of 25% for AMD and Y2000 eps of $2.50 (conservative(?), AMD trades conservatively at $60!!! What's this $22 stuff all about???