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

To: Pravin Kamdar who wrote (18876)	11/13/2000 2:15:41 PM
From: Maverick	Respond to of 275872

GTW is First PC OEM Vendor to Feature High Speed Home Networking biz.yahoo.com

To: Pravin Kamdar who wrote (18876)	11/13/2000 2:24:58 PM
From: AK2004	Read Replies (1) \| Respond to of 275872

Pravin anytime, below is GS report Regards -Albert 09:13am EST 13-Nov-00 Goldman Sachs (Joe Moore) AMD AMD analyst meeting: focus on MPU and flash; reiterates positive outlook; MO Goldman, Sachs & Co. Investment Research AMD analyst meeting: focus on MPU and flash; reiterates positive outlook; MO *************************************************************************** * AMD's annual analyst meeting focused on the company's microprocessor and* * flash memory businesses with detailed presentations on each group and * * one on manufacturing process technology. The company reiterated current* * quarter guidance and bullish outlook (with revenue growth in '01 * * projected at 22% or better) driven by continued strength in * * microprocessors and flash, with AMD indicating that it expects the flash* * market will remain in a supply/demand imbalance through '02. We * * continue to be a bit cautious on both businesses currently and maintain * * our outperformer rating. * *************************************************************************** Joe Moore (New York) 1 212-902-6834 - Investment Research =================== NOTE 8:56 AM November 13, 2000 ==================== Stk Latest 52 Week Mkt Cap YTD Pr Cur Rtg Close Range (mm) Change Yield --- ------ ------- ------- ------ ----- Advanced Micro Devices, Inc. MO 20.06 48-11 6249.3 39% 0.0% --------------Earnings Per Share--------------- AMD (US$) Mar Jun Sep Dec FY CY 2001 FY 2.25 2000 FY 0.58A 0.61A 0.64A 0.66 2.48 1999 FY(A) -0.41 -0.55 -0.36 0.22 -1.19 -Abs P/E on- -Rel P/E on-- EV/NxtFY LT EPS Cur Nxt Cur Nxt EBITDA Growth ----- ----- ----- ----- -------- ------ AMD FY 8.1X 8.9X 0.3X 0.4X NA NA% =========================================================================== * On the financial front, the company reiterated guidance for the current quarter despite a relatively slow start in microprocessors in October, but noted pickup in the first part of November. The company also projected high teens year-over-year growth for Q1'01, which would imply sort of flat-ish growth (plus or minus a couple of points) to current Q4'00 estimate. Full year '01 projection for growth at least inline with overall semiconductor industry rate of 22%. * AMD detailed its microprocessor roadmap through '02, which showed Palomino (evolutionary improvements for Athlon) and Morgan (same for Duron) for desktop and mobile in '01 (Q1 and Q2, respectively) with 0.13 micron shrinks in '02, and 8th generation 'Hammer' products in '02. 'Hammer' will consist of two product families: Clawhammer is expected to sample in Q4'01 and ship in Q1'02 and will target desktops, mobile, and one- and two-way servers; and Sledgehammer will target four- and eight- way servers. * AMD indicated continued strength in flash with expectations that the supply/demand imbalance in this market will continue through '02. AMD projected its capacity will expand at a 77% CAGR from '00 to '05, but expects demand will grow in excess of a 100% CAGR from '00 to '05, with consumer, automotive, and cell phones all growing at rates greater than 100%. AMD also detailed its position in the flash market noting the company's end market diversification, which is somewhat different than the overall industry. =========================================================================== Detailed review: AMD's annual analyst meeting focused on the company's microprocessor and flash memory businesses with detailed presentations on each group and one on manufacturing process technology. The company reiterated current quarter guidance and bullish business outlook. The meeting was well attended though audience reception was somewhat mixed. Microprocessor story was well received, but many questions were asked regarding company's continued bullish flash memory outlook due to concerns over customer inventory and potential softening of pricing in spot market. Details of microprocessor discussion: AMD reviewed its success with Athlon thus far and detailed its microprocessor roadmap through '02 driven by Athlon core revisions and process technology advancements and a new microprocessor core, the company's eighth generation, which is currently code-named under the 'Hammer' moniker. The company provided additional detail on the evolutionary improvements for the Athlon and Duron families, which are code-named 'Palomino' and 'Morgan', respectively. The company expects to begin production shipments of 'Palomino' for both desktop and mobile in Q1'01 with clock advancing to 1.5GHz in Q2 and faster in the 2H; initial 0.13-micron process shrink is then expected in Q4 (Palomino shrink code named 'Thoroughbred'). Morgan is a low-cost derivative and trails by one quarter; Morgan process shrink will be in Q2'01 and is code named 'Appaloosa'. AMD 8th generation 'Hammer' microprocessor core will be the first based on the company's 64-bit x86-64 platform and will consist of two product families: Clawhammer and Sledgehammer. Clawhammer is expected to sample in Q4'01 and ship in Q1'02 and will target desktops, mobile, and one- and two- way servers. Sledgehammer will target four- and eight-way servers with larger on-die secondary cache; Sledgehammer is expected to sample in Q1'02 and ship in Q2. The 4- and 8-way servers will be supported by the company's Lightning Data Transport (LDT) interconnect technology, which improves scaling of I/O bandwidth. Details of flash memory discussion: AMD also detailed its position in the flash market noting the company's end market diversification, which is somewhat different than the overall industry. AMD has greater exposure to networking/telecom (24% for AMD vs 8% for the flash industry), automotive (10% vs 4%), and settop boxes (10% vs 6%), and lower exposure to cellular phones (36% for AMD vs 46% for the industry), PCs (9% vs 13%), and other (11% vs 23%). AMD attributed this difference in end market exposure to the company's products being superior to other producers' devices, demonstrated by AMD meeting the higher and increasing technical requirements of communications and automotive end markets. Thus, AMD expounds that it's flash products are not necessarily commodity in nature as they hold defensible positions through technical differentiation. Our concern continues to be the small end market turbulence and dramatic inventory buildup from customers in both the cellular handset market and the networking market, and while we foresee relatively strong end demand growth in both markets next year it seems likely that this strong demand growth will be outpaced by supply. AMD indicated that it expects that ASPs will be up year-over-year in '01 and that the supply/demand imbalance in the market will continue through '02. AMD projected that demand will grow in excess of a 100% CAGR from '00 to '05, with consumer, automotive, and cell phones all growing at rates greater than 100%. AMD expects its capacity will increase at a 77% CAGR from '00 to '03 with incremental capacity coming from Fujitsu Gresham (qualified and beginning to ramp) and JV3 (under construction currently) and process shrinks: 0.18-micron (introduction in '01) and 0.13-micron (introduction in late '02). Discussion of finances: On the financial front, the company reiterated guidance for the current quarter despite a relatively slow start in microprocessors in October, but noted pickup in the first part of November. The company also projected high teens year-over-year growth for Q1'01, which would imply sort of flat- ish growth (plus or minus a couple of points) to current Q4'00 estimate. Full year '01 projection for growth at least inline with overall semiconductor industry rate of 22% based on continued strength in flash and microprocessor. In regards to the PC market, the company indicated that it expects PC unit shipments increase by 15% to 17% in '01. We continue to view AMD's current microprocessor offering and roadmap as being competitive in the market place, but continue to express a somewhat cautious approach to the stock based on flash memory concerns related to noted inventory issues with both cellular handset and communications equipment manufacturers.