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

To: Road Walker who wrote (46367)	7/6/2001 1:43:38 PM
From: Paul Engel	Read Replies (2) \| Respond to of 275872

John - Re: "Should AMD forget about market share, and manage their business towards an acceptable gross margin? " This question is not appropriate. AMD is run - not on business principles - but by and for the whim and ego of Jerry Sanders. Sanders still fancies himself as the Salesman Prima Donna of years gone by - and he can't come to grips with the fact that Intel - driven initially by engineering-minded people - has blown past AMD and become the dominant semiconductor manufacturer in the world. Sanders wants AMD to be Intel and Intel to suck hind-tit to AMD - plain and simple. He will stop at nothing in pursuit of this goal. His "30% market share" goal is just a ruse - he wants Intel's entire market share.

To: Road Walker who wrote (46367)	7/6/2001 1:52:06 PM
From: dumbmoney	Read Replies (1) \| Respond to of 275872

Should AMD forget about market share, and manage their business towards an acceptable gross margin? Charge what they think is a fair price, regardless of what Intel is charging. They would obviously lose market share. But there are plenty of AMD loyalists, so they would continue to sell product. Won't work. AMD needs to gain market share for long-term survival. Unfortunately, they are undercapitalized for this task.

To: Road Walker who wrote (46367)	7/6/2001 2:08:22 PM
From: andreas_wonisch	Read Replies (2) \| Respond to of 275872

John, Re: Should AMD forget about market share, and manage their business towards an acceptable gross margin? Charge what they think is a fair price, regardless of what Intel is charging. Good point. It was my impression that Atiq Raza (before the dispute with Jerry) wanted to change AMD's business model into this direction (cut costs down, less aggressive on getting market-share etc.). Of course this goes completely against Jerry's ideas for AMD's business model. The big problem with this strategy is IMO that AMD would be less attractive for partners like Nvidia or VIA which AMD needs desperately. Apple e.g. doesn't need those partners (except Motorala) because they build and sell everything themselves. But in order for AMD to get higher ASPs they would need both excellent processors and excellent infrastructure support. No-one would buy a $300 AMD CPU if the best motherboard available would be a $100 model from PC Chips with an SiS chipset and they had to buy it from a second-tier OEM. So what are AMD's options? IMO they should can Duron and try to establish a better brand with Athlon. They need to advertise more and try to convince Joe Average that an Athlon is as good or better compared to an Pentium 4, even at a lower clock-speed. This alone could improve ASPs by a big margin. Also, they should desperately try to get business wins from top-tier OEMs like IBM, Compaq or HP. I'd even tolerate selling CPUs for some time at a loss, if they could get one or more business wins then. If they are established, other OEMs will follow and it will be very difficult for the OEMs to dump them again. Also AMD's marketing needs to become a lot more creative to stimulate demand for AMD processors. They had e.g. a golden opportunity to establish 1 GHz Athlons (or Durons, if they want to keep the brand) in Q2. I'm sure there would be enough demand if OEMs offered low-end systems with one GHz -- exclusively from AMD. AMD needs to get rid of the old business model "undercut Intel in every market segment by price and follow their lead in technology". But I guess as long as Jerry is on the helm, nothing will change. And I doubt that Hector is any better. Andreas

To: Road Walker who wrote (46367)	7/6/2001 2:53:26 PM
From: Charles R	Read Replies (1) \| Respond to of 275872

<I'm curious what the consensus is here. Should AMD forget about market share, and manage their business towards an acceptable gross margin? Charge what they think is a fair price, regardless of what Intel is charging. They would obviously lose market share. But there are plenty of AMD loyalists, so they would continue to sell product. Maybe 35% less units with double the GM, and with lower overhead.> That business model will kill AMD in the long term. Even in this quarter, I estimate AMD had about $100M positive cash flow (as opposed to Intel which has been burning cash). As long as there is positive cash flow there aren't too many good reasons to not go for market share. Over the long term it is much more difficult for Intel to dislodge a 25 or 30% market player than 15-20% market player. <Sort of an Apple business model. > And, clearly Apple is a very good example of why not to follow that business model. In general, it is a bad idea in semiconductor or software sector to cede market share.