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

To: AK2004 who wrote (22836)	12/18/2000 3:33:16 PM
From: niceguy767	Read Replies (2) \| Respond to of 275872

albert: "Advanced Micro Devices (AMD) Gaining Share We were surprised at the momentum that AMD seems to be achieving with some customers, especially in portables. One high-volume manufacturer that builds portables for PC OEMs including Hewlett-Packard, Toshiba, Fujitsu and Dell suggested its share of AMD microprocessors could move from the 20% levels seen in C00 to the 40% level in C01. Although this may represent a greater share than what will be seen in the overall market, it does suggest the current generation of AMD Athlons represent compelling price/performance solutions." What the heck is the following comment all about???"We were surprised at the momentum that AMD seems to be achieving with some customers, especially in portables." Paul tells us AMD has no presence in the portable market!!!

To: AK2004 who wrote (22836)	12/18/2000 3:33:36 PM
From: AK2004	Read Replies (1) \| Respond to of 275872

and a downgrade for intel: 12:36pm EST 18-Dec-00 Wit SoundView (Scott Randall 203-462-7246) INTC INTC.GWI Intel (INTC) estimate Revision December 18, 2000 Intel (INTC) Price: $32.00 Buy December 18, 2000 (FYE December) F99A F00 F01 Curr. Last Yr. Ago Revenue ($M) - - 36,013 8700 - - EPS - - 1.47 0.37 - - Old Revenue 29389 33,724 36,446 8700 8731 8212 Old EPS 1.16 1.64 1.50 0.37 0.41 0.34 Summary We are further reducing our estimates for Intel based on research completed during our trip last week to Taiwan. Although Taiwan tends not to be geography suited for determining end-market demand, its important role in the manufacturing pipeline does provide a read of near-term market conditions. In addition, the growing importance of local Taiwan chipset manufacturers also provides strong insight into the issues facing Intel. Our estimate reductions primarily reflect further conservatism on Intel's chipset business. Although our earlier estimate reductions reflected both weak unit and revenue growth for processors, we believe that chipsets could represent an additional area of concern. Specifically, we have reduced our chipset assumptions by about $400 million for 2001, representing what we believe will be a combination of inventory overhang, marketshare loss and pricing pressure. We continue to not see any catalyst that will serve to drive a near-term recovery in Intel's shares. Although our survey data suggest reasons for greater optimism in 2H01, we continue to be cautious on the stock and continue to sell into any end-of-the-year or early 2001 strength. Discussion Our Estimate Reductions Are Driven Primarily By a More Conservative View of Intel's Chipset Business in 2001: * We believe that motherboard inventory levels are extremely high. Through conversations with both motherboard manufacturers as well as local component manufacturers selling into these vendors, we believe there are currently greater than 10 million motherboards. This compares with typical end-of-the-year motherboard levels of one to two million units. Although a high a percentage of these motherboards are not yet populated with either memory or processors (components which are typically socketed and only installed at the last minute), it does represent a significant overhang of core logic chipsets - components which are soldered down onto motherboards. With current chipset pricing ranging from a low of less than $10 to a high of $30, and with Intel still controlling upwards of 60% to 70% of the market, we believe this represents a direct revenue risk to Intel. Our estimate reductions reflect an approximate 25% reduction in C01 chipset revenue or about $400 million reflecting a combination of inventory, marketshare and pricing concerns. * Likelihood of market share loss in 1H01 on chipsets. Intel's control of approximately 60% to 70% of the chipset business in C00 represents yearly revenue for Intel of between $1 billion to $2 billion. In 2001, we believe it is likely that Intel will see further marketshare erosion in chipsets as other vendors support a broad range of mainstream memory solutions including DDR. Although we believe that Intel's DDR-based Pentium 4 solution will enter the market in volume in late 3Q01 or early 4Q01, we believe that chipset solutions from Taiwan manufacturers may be ramping in volumes as early as 2Q01. In Addition, Our Trip to Taiwan Reinforced Our Conservative Outlook for 2001 on Several Fronts: * Increasing signs of price pressure. Vendors we spoke with have suggested budgetary pricing for 1.5 GHz Pentium 4s in the $200 range for C2H01. This suggests mainstream pricing for Pentium 4s just six months after their introduction. Although we do expect Intel to have Pentium 4s at 2 GHz in 2H01 at 0.13 mu., budgetary pricing being given now to customers suggests a more rapid decrease than we would have expected. * Signs of market share loss in 1H01 on microprocessors. We were surprised by the design-in gains being made by AMD. Driven by a combination of competitive clock rates and aggressive pricing, a number of motherboard vendors suggested to us that strong market share gains are likely for AMD. Although Taiwan has always been more friendly to AMD as a corollary to Intel's focus on leading tier-one PC OEMs, sometimes to the detriment of Taiwan vendors, we believe that even traditional U.S.-based OEMs are looking increasingly favorable at Athlon vs. Pentium 3. In addition, we see a little sense of urgency for vendors to adopt Pentium 4 for mainstream computers. As we've noted previously, a combination of limited performance gains (with business applications running on 1.5 GHz Pentium 4 showing typically 5% performance increases over 1 GHz Pentium 3s) as well as more expensive system cost driven by RDRAM is limiting near-term demand for Pentium 4 based systems. * A collective view of 2001 that continues to reflect significant conservatism. For many of the motherboard manufacturers we spoke with dealing with tier-one OEMs as well as white box vendors, we believe that the view from Taiwan gives a good indication of the industry's collective forecast. Although opinions vary, we believe that most vendors are planning for a flat-to-10% industry revenue growth driven by a combination of unit growth and pricing pressure. We noted in early November that the speed with which inventory levels were being taken down suggested to us more than just an inventory correction. With numerous OEMs having now pre-announced, we believe that our view of these reductions being driven by a weakening of end-market demand has been verified. Although 2001 in total will certainly depend in large part on the underlying macroeconomic health, we believe that component vendors are likely to see a slow start to 1H01 - including Intel. From Our November 20, 2000 Downgrade Note: We are reducing our estimates as well as our rating, driven primarily by concerns that 1H01 may not be as favorable a time for Intel as we had previously hoped. Although we have continued to be excited about the prospects of Pentium 4 reinvigorating both Intel and the industry, we believe this stimulus is much more likely to happen in 2H01 than in 1H01. Coupled with what we believe is the growing likelihood of a more aggressive pricing environment, we believe that Intel's stock could find itself in a prolonged trading range. Our estimate reductions reflect changes in ASP, gross margin and unit assumptions for 2001. Although Intel enjoyed a period of relative pricing stability over the past five quarters, we believe that going forward this situation is likely to change. While we have argued that the addition of the Pentium 4 will provide Intel with increased segmentation and will result in greater pricing flexibility for the company, we believe that this scenario won't fully play out to Intel's benefit until 2H01. Increasingly, we expect to see a greater willingness on the part of both Intel and AMD to be more price-competitive in order to either gain or protect market share. In the case of AMD, although the company's strongly held goal previously was to move prices higher year over year, we now believe that internal goals of simply maintaining prices at the levels seen in 2000 could be challenging. This is despite a product line that includes exposure at the highest clock rates. With AMD's Athlon family competing across a wide range of clock speeds, we believe this suggests greater pressure on Intel's ASPs as well. For Intel, our gross margin assumptions for 2001 have been reduced to 62% from 62.5%, while our ASP assumptions now include a 5.5% decline y/y (vs. 4.5% previously). Our unit assumptions have been reduced from 17.1% to 15.3% y/y growth. PC driven component demand has continued to be weaker than seasonally expected for the past several months. We believe this demand weakness suggests a combination of inventory work-downs as well as greater uncertainty about the demand environment: * Weaker than expected demand through the back-to-school season left PC vendors and contract manufacturers with higher than desired inventory levels. * Increasing concern about consumer demand has resulted in a more tentative ordering climate. Simply put, we believe that PC OEMs are increasingly concerned about exiting the year with higher than expected inventories. * Our checks in Taiwan suggest that motherboard build rates have continued to be weak through October and into November. Although inventory work-downs suggest that this does not directly correlate with activity in the end markets, the duration and magnitude of the weakness has been surprising. * Proprietary conversations with a number of other component suppliers selling into the PC space (including clock chip vendors) suggests that quarter over quarter component demand in 4Q00 could be roughly flat, compared to the typical double digit growth normally seen here. Although limited activity among the motherboard vendors may suggest we could enter 2001 in better inventory shape than would be the case if build rates had continued despite the less than compelling demand, we believe the reduced build rates continue to suggest a high degree of conservatism among box builders. Although the first real read of seasonal PC sell-through does not occur until after the important Thanksgiving weekend, we believe anecdotal evidence exists to suggest that counting on considerable strength from this area is unwarranted. Pre-releases from Best Buy and Circuit City contribute to the uncertainty surrounding consumer PC demand. With Intel selling to the market across all segments and price points, a weaker than expected consumer environment could subject Intel to the possible effects of any inventory overhang in the consumer channel.

To: AK2004 who wrote (22836)	12/19/2000 10:29:04 AM
From: niceguy767	Read Replies (1) \| Respond to of 275872

albert: "We were surprised at the momentum that AMD seems to be achieving with some customers, especially in portables. One high-volume manufacturer that builds portables for PC OEMs including Hewlett-Packard, Toshiba, Fujitsu and Dell suggested its share of AMD microprocessors could move from the 20% levels seen in C00 to the 40% level in C01." Seriously, notwithstanding Paul's assertion that AMD has no portable presence...Why would anyone be doubling up on AMD portables, unless they are AMD's next generation portable and a portable that exhibits all the earmarks of a "new" champion, i.e outstanding price/performance for the dollar...not unlike the Athy in the PC sector???