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

To: Road Walker who wrote (51877)	8/21/2001 1:04:35 PM
From: AK2004	Read Replies (1) \| Respond to of 275872

John I am not sure why intel set it's pricing strategy to what it is. My point was about market share. What you are talking about is optimization of the profit in what sometimes called an equilibrium state, I think. Unfortunately that is not the case with amd. For amd to stay competitive in the future rather than sub-optimizing for athlon product line it needs minimum cash flow in-flow. Given that amd's profit margin requirements are lower than intel's it would need less of a market share or lower asps than intel in that "equilibrium". It seems that Jerry concluded that he needs 30%. My personal view is that amd needs no much less than 20%. Either way until that percentage can be reached amd can not do product line optimization Regards -Albert

To: Road Walker who wrote (51877)	8/21/2001 1:39:37 PM
From: hmaly	Respond to of 275872

John Re..AMD, on the other hand, seems to have settled on a policy that's more about hurting Intel than helping AMD (or it's stockholders). Flat 25% off Intel. Even when the market was capacity constrained, in total disregard of profit potential, or longer term pricing power. <<<<<<<<<<<<<< John, while you feel that 25% price differential isn't flexible enough, many of AMD's customers probably have let it be known to the sales rep. that it is important. When you add in Intle's adv. rebates, there probably isn't a lot of diff. in price. If AMD backs off of the 25% diff. now, it could mean those customers won't get it back later, and a lot of customers could simplify their operations by going to one supplier. As in a gunfight, the first one to blink loses. Albert, why not go to 30%, 40% or 50% off Intel's prices, if thats such a great strategy. Once again, the sales reps probably have indicated it is important. And you still didn't answer, do you think Intel would be less aggressive with it's prices if AMD was closer to parity?<<<<<<< Maybe, maybe not. If Intel senses their price war is working, Intel may just try to finish it off. Without any prospect of a speedy resolution, Intel could just as easily be the first to blink, and walk away. While Intel has more cash, Intel doesn't have 30 times AMD's cash, so AMD is doing relatively well. And when we consider that AMD was losing money with just 12.5 % of the market in 1999, things aren't so bad now, and their position in terms of market share and recognition of the Athon as a great chip is growing; especially when one considers recent market share reports in small business and gov. sales. If AMD's cash position was deteriorating very badly, I doubt if AMD would have been able to purchase 1/2 of Gresham plant.

To: Road Walker who wrote (51877)	8/21/2001 3:19:01 PM
From: that_crazy_doug	Respond to of 275872

<< And you still didn't answer, do you think Intel would be less aggressive with it's prices if AMD was closer to parity? >> Depends if Intel how much market share Intel was regaining, and if they were moving P4s or not. Intel is in a slightly different position then AMD in that they don't have to respond to AMD price cuts, they can afford to keep their prices higher and lose a little bit of market share. 5% market share to Intel would only be about 6.5% of their total unit share, and so they could likely easily command a much higher hten 6.5% premium if they were willing to give up 5% of the market. 5% market share for AMD would be 25% of their total unit share, and so they'd have to be able to command a much much higher price to make up for it if they lost it. At this point, I really doubt that AMD would be better off to lose that market share because I don't think they could raise prices enough to offset the loss. From a long term perspective I can see why Intel wants to obliterate AMD and not let them have any market share. Even though I think it's obvious that they could do much better revenues and earnings wise without all the price cuts. They might be cutting off their leg with the price cuts, but amputation can save lives sometimes too. From an AMD perspective I think it's a pretty difficult to say whether or not going for the share is maximizing revenues/profits or not. There is certainly no guarentee like in Intel's case where if they let up on the price cuts that they'd be better maximizing profits or not. Also, the more share the more they establish consumer confidence, oem confidence, and software/hardware industry support. (none of these problems are issues for Intel at all). If I were running AMD I would keep the discounted price strategy. I'd be pissed off that we can't get out a better product because what they really need is something that ramps at least close to the p4 in raw mhz, but wishing and pricing isn't going to make that product appear, so I think they might be doing the best they can with what they have.