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

To: dale_laroy who wrote (35767)	4/15/2001 10:56:53 AM
From: niceguy767	Respond to of 275872

dale: "But the Intel investing fraternity is all too "Bull"headed when it comes to Intel. They will be expecting a recovery any minute now right up to the point that Intel announces a quarterly loss." Maybe, maybe not...With the accelerating negative trends in margins and product price/performance comparisons occurring at INTC, as will be evidenced by steep negative earnings and revenue declines on Tuesday, I doubt if even the bull-headed INTC investing fraternity will miss that fact that any significant turnaround at INTC is a year away at the earliest and that's only if INTC suffers zero missteps along the way, a prospect that performance based upon the past twelve months would not confidently support...Steep negative declines as we are about to witness at INTC on Tuesday just don't get turned around in one quarter...Such steep declines are usually the result of years of flawed planning and are often masked in preceding quarters by stop gap measures such as "capital investment contributions to earnings" and as such can often take years to reverse!!! Once the "stop gap" measures, designed to buy time, have run their course, as has INTC's "investment capital arm's" reserve fund, very significant revenue and eps erosion is likely to result in the ensuing quarters if the additional time bought by the stop gap measures has not resulted in a solution to the basic problem, that being, offering en masse, price/performance competitive products... We will get a glimpse of the real extent of INTC's current woes on Tuesday, woes characterised by plummeting gross margins in processors, the imminent obsolescence of P3 and celeron, negative earnings in the "non-processor" businesses comprising 20% of INTC's revenues, a capital investment arm mired in losses, and a P4 facing a plethora of technical hurdles, which even when and if successfully addressed, will probably result in a product that still lags in price/performance the next evolution of AMD products emanating from the palomino family of processors... The enormity of the revenue and eps declines currently underway at INTC suggests to me, as I've mentioned before, that INTC's Q1 is likely its high water earnings quarter of the year...Anything under $8 billion in revenues and $0.25 in eps in Q1 may extrapolate into Y2001 revenues well less than $30 billion (maybe even considerably less given the absence of about $3 billion in capital investment gains) and an eps that is unable to remain positive (which is a rather startling, steep and abrupt turn in fortunes when compared to revenues of $33.7 billion and an EPS of $1.52 in Y2000)...The picture in front of me certainly suggests that a Y2001 eps of $0.28 (as compared to current consensus somewhere around $0.70) may be a difficult target for INTC, which if so, implies that at $28, the market currently accords INTC a seemingly absurd p/e of 100, in an environment where negative revenue growth is by far the most likely scenario unfolding at INTC in Y2001 diven its current product lineup woes... Last year AMD's eps of $2.94 crossed over INTC's eps of $1.52...Currently, AMD's share price of $25 is flirting with crossover of INTC's share price of $28...Sometime in Q1, Q2, Q3 or Q4 of thiis year, I won't be surprised to see AMD's quarterly dollar profit of about $150 million crossover INTC's quarterly dollar profit as INTC's quarterly profits slide inexorably from about $1.8 billion in Q1,assuming a $0.25 eps, (compared to about $2.5 billion in Q4) into negativity sometime between Q1 and Q4 of Y2001... Paul, if you're there, the writing is on the wall at INTC...The INTC castle is a shambles...This could be the year where AMD's absolute dollar earnings surpasses INTC's...Current negative trends unraveling at INTC suggest to me that any Q1 profit at INTC could easily be more than offset by the probable string of losses likely to accumulate through Q2, Q3 and Q4!!! Hey Paul, the heretofore unimagineable, the spectre of a Y2001 negative eps at INTC, has reared its ugly head and it just won't go away!!! ______________________________________________________________________________________________ "Do you always go to Canada to get your books?" Only when I can manouevre safely in my snowshoes amidst the plethora of igloos and then, only if the polar bears are hibernating (sometimes, if they are hungery, they do pose a real danger along the Yonge Street trail !!! :-)