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

To: kash johal who wrote (48599)	7/22/2001 12:14:55 AM
From: Dan3	Read Replies (3) \| Respond to of 275872

Re: if things dont turn around they could start losing $200-300M/qtr (imagine 15M units/qtr at ASP of $50 average). But not for too long. Because in that scenario Intel is selling 25M units/qtr at an ASP of $100. AMD would be losing $200M/qtr while Intel loses $1.5Billion/qtr. They'll work out some kind of wink-wink, nudge-nudge, market sharing agreement. But I think we may see a quarter or two like that first. Longer term, I continue to believe that a company organized around the notion that its business plan has to support operations that are very profitable if ASPs for CPUs are $100 is going to do better than a company that starts losing money when ASPs drop below $150.

To: kash johal who wrote (48599)	7/22/2001 2:36:22 AM
From: bacchus_ii	Read Replies (1) \| Respond to of 275872

RE:"And a test of $6-7/share (in worst case scenario) would not shock me. " Come on Kash: $6/shares mean 2.1B for AMD... they have 1.6B in cash ~0.5B debt that leave 1B for Dresden + Fab25 + flash + IP +..... Gottfried

To: kash johal who wrote (48599)	7/22/2001 1:10:47 PM
From: tejek	Read Replies (2) \| Respond to of 275872

Well i disagree. The semi business is very fixed cost/capital intensive. AMD has two options: 1. Retrench back to 10-15% share. This will involve shutting down some fabs such as Fab 25 and some flash fabs. This will mean HUGE one time special charges. But likely modest profits going forward. 2. Fight out for market share. Get to 30% and hope market turns by early 2002 enabling higher margins. They have clearly chosen option2. Unfortunately if things dont turn around they could start losing $200-300M/qtr (imagine 15M units/qtr at ASP of $50 average). If market and product mix doesnt change they could be in a world of hurt. Kash, I am not sure that we disagree...unless you like Option 2. Option 2 always has been the way with Sanders/AMD...banking all your chips on some hoped for saving grace. Unfortunately, Option 2 depends mightily on a desired turnaround which we all know never comes when you want it or need it to come. I don't care how very fixed cost/labor intensive an industry is, when you get into a mess like the one AMD is in the best approach is to shut down the bleeding as quickly as possible. You want to minimize losses and keep your cash intact for the time when the turnaround does come so you can once again pursue market share. Unfortunately, this is not Sanders style and he will push for option 2. That's why the market is selling off the shares. They expect a return to AMD's bleeding days. AMD has 2 legs: Flash - is now money losing. CPU's- modestly profitable is about to go negative. Unfortunately that is correct. And more unfortunate is that AMD could not get the only winning horse in the current pc marketplace, Dell, into its stable. Therefore, Intel has an edge over AMD one more time. As far as stock price i can see a sub $10 stock price easily as the low if things don't turn before next year. And a test of $6-7/share (in worst case scenario) would not shock me. Agreed....below $13.50, it would be a free fall to $6-7. However, such a drop would signal a serious global recession and I don't think we are going there. Therefore, I expect AMD to hold above or at $13.50. ted