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

To: DRBES who wrote (103261)	10/19/2003 10:42:52 PM
From: pgerassi	Read Replies (2) \| Respond to of 275872

Dear DRBES: Given that September is 50% of the quarter and September is back loaded too, then the last day of September has between 2.5% and 3% of the quarter's sales. Now remember that AMD's Q3 ended on September 28th rather than the more normal 30th. With the last two days of sales including heavy A64 sales, this probably shrank Q3 sales by 5% to 6% (if not more, since AFX and A64 only sold for 6 days rather than 8). Thus, sales were 105% (taking the conservative amount) of $945 million or $1,002 million for a new additional revenue total of $57 million. 70% of that (new AMD target for fixed expenses) is $40 million or enough to make Q3 profitable to the tune of $10 million or $0.03 a diluted share. Pushing that additional money into Q4 virtually guarantees a profit in a normal Q4 from a Q3 base. $0.50 a diluted share would happen, if Q4 grows as much over Q3 as Q3 did over Q2 (assuming zero taxes given previous losses and no gains from moving last 2 days of Q3 into Q4). Another thing to consider that AMD's original plan was to make a 130nm 256KB L2 A64. That would have been a 108mm2 to 112mm2 die. 90nm is going so well, that they decided to drop it and make a 90nm version only. That would put it between 54mm2 and 60mm2 (adding even more decoupling capacitors to hold down switching noise). Given that AMD could produce 8.5 million 84mm2 Tbreds a quarter, they should be able to eventually make 12 to 13 million 90nm 256KB A64s per quarter. Adding in 10% 90nm 1MB L2 versions (in 754 A64, 939 AFX and 940 Opteron packages), they should still be able to make 11 to 12 million high margin CPUs a quarter from Dresden alone. Could Intel survive on 30 million Celerons and Value P4s per quarter alone, without high end desktop, mobile and all workstation and servers? Just look at what a $2.6 billion decline in IAB would mean (the low operating margins are more than made up by the loss of high end chipsets, MBs and others) $6.838 billion goes to $4.238 billion with an operating profit of $315 million minus the other divisions ($611 million) makes for a loss of $296 million. And the loss assumes only a match with AMD revenue. If Intel's ASPs are higher for the same end, as has been the case historically, the revenue hit would be that much harder. For AMD, $2.6 billion plus current flash means over $3 billion in revenue per quarter with $2 billion over breakeven. Given that target of 70% fixed, a profit of over $1.4 billion per quarter pre tax and $1 billion after tax could pay for 65nm 300mm fabs easily with more than enough left to get us a stock price in the hundreds of dollars per share (pre split). No, Intel will drop the Itanium before then (or place it on the way back burner to be forgotten) and bite their pride (the old NIH syndrome) and follow AMD to AMD64 with perhaps Intel extensions (less probable the longer they wait). This supposes they get 90nm fixed and they can keep up in performance. If they don't, they will either see red for a while or get out of the CPU business (they've switched business targets (DRAM to CPUs) before but, I do not see an obvious target this time). Pete <edit fixed minor spelling errors and grammer>

To: DRBES who wrote (103261)	10/20/2003 1:01:08 AM
From: Petz	Read Replies (1) \| Respond to of 275872

I have trouble coming up with any senario in which AMD will earn less per share than inteL will this quarter. (as per the niceguy) Here's one - When AMD said to expect 10-15% growth this quarter, they may have been talking $'s rather than units. We've all been adding 10-15% to Q3's dollar numbers and then besides that, adding in extra revenue for more K8 chips (100s of thousands vs. 10s of thousands). But AMD may have already factored that in when they made the 10-15% prediction. Worst case, if revenues rise 10%, AMD will have operating profit of 49M. Subtract 27M interest expense and the profit is only 22M or $0.06. (I'm pretty sure that the $1B "breakeven" level is the level for 0 operating profit, not 0 net profit, but I could be wrong.) The other point is that Intel will almost certainly have higher profits for Q4 than for Q3. Petz