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

To: eplace who wrote (16993)	10/31/2000 9:00:48 PM
From: Charles R	Read Replies (4) \| Respond to of 275872

Ed, <You have previously stated that AMD should either spin-off or sell their flash division. > Yup. <Their flash portion of the business is growing like gangbusters and is providing a steadily growing revenue stream. > Absolutely true. Growing at about 100% Y-o-Y. <In fact if the chip part of the business were to remain static this quarter either from not making their stated goals of shipping more Athlons or falling ASPs (neither of which I am counting on happening), the flash business alone should provide at least another 5 to 10 cents per share increase. > Another 40M to the bottom line from flash alone is possible.for Q4. So, yeah, that can have big impact on EPS. <How can this not be a good thing? > It is a good thing. No disagreements on this part. <Sorry, but I don't buy your argument that AMD's share price is being held back by some perception that the company is being treated like a Flash manufacturer only. > I do not believe I eve said that. <AMD's biggest problem wrt to share price is IMO past performance and analysts comments that Intel will squash AMD any day now. > Agreed! Don't you think that makes a strong case for spinning off flash so that valuation for that part of AMD is not depressed because of concerns from Intel? <It's been awhile since you discussed this, but after acquiring another long term contract with Nortel today, would like to know what your latest thoughts on this are.> Nothing changed substantially - except that I am happier to be a long today than yesterday. My contention has been that : - AMD is executing beautifully on Flash - AMD needs laser like focus on CPUs and flash is a distraction - CPU biz and Flash biz have almost nothing in common and there is no synergy between the two businesses - Flash is not being valued properly because of AMD's track record and a spin-off would give that divison a clean slate - Sometimes CPU side does not get valued properly whenever there is a scare about flash demand Bottom line: There is no reason for these two groups to be part of the same company. Flash today is worth more than current AMD valuation. I would like to see that being unlocked. People who have seen me post on this topic know I used to give 3Com and PALM as an example of why splitting off pays - this was before 3Com/PALM split off. I bought COMS in the mid-to-high 20s last year. I got 1 COMS and 1.48 PALM for each of my COMS shares. Today COMS is at ~20 and PALM is at 50+. That is the beauty of unlocking hidden value. If AMD spins off flash now, say, 1 AMD and 1 FLSH for each AMD share, I think the combined value will grow 5 to 10 fold in 1 year. And, I am not being a NiceGuy when I say this. That AMD management is not doing this simple logistics move chagrins me to no end. Cheers, Chuck