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

To: BUGGI-WO who wrote (191545)	4/1/2006 8:37:44 AM
From: cruzbay	Read Replies (2) \| Respond to of 275872

BUGGI, et al: For the pure longs, the next few weeks are somewhat immaterial, as the longer term trend is very clearly bright. I have adulterated my large long position with some very short-term calls (April $40's), and have tried to average these down as their price has fallen. So for me and other risk-takers, the next few weeks are of very material interest. I appreciate Buggi's conservatism when it comes to Q1, and like others, am having a really hard time "reading" this quarter. If any reasonable fraction of the Intel shortfall has been flowing to AMD, the quarter will be glorious, but something tells me this is looking too far on the bright side. For one thing, if Q1 was already sold out from the beginning (as forecast by Hector's "flat to down"?), they couldn't pick up additional share even if available. There were also reports that worldwide CPU sales fell steeply in January (28% YoY according to the Inquirer: theinquirer.net. On another note, word is that March had a nice rebound. It's really tricky to call, and since I am thinking of picking up some lower strike price ($35?) calls to insulate me a bit on the $40's if we don't have a breakout earnings report, a better read is pretty critical. I appreciate the board's insights, and would love to continue to hear how fellow board members read the tea leaves.

To: BUGGI-WO who wrote (191545)	4/1/2006 9:08:47 AM
From: niceguy767	Respond to of 275872

Buggi, to be sure Q1 numbers are not easily predictable, and of course, you may be correct in sticking within the current guidance range of $1.2B to $1.3B in revenues, especially given seasonality factor and INTC's 2nd downward revision to guidance in the quarter. For me however, the salient indicator is trend of revenue share gain. Following are the trend numbers for the past year: Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Revenues/Quarter AMD CPU 730 750 767 969 1,307 1,500 INTC CPU 6,966 6,861 6,659 7,267 7,329 6,395 TOTAL CPU 7,696 7,611 7,426 8,236 8,636 7,895 Percentage Revenue Share by Quarter AMD CPU% 9.49 9.85 10.33 11.77 15.13 19.00 INTC CPU% 90.51 90.15 89.67 88.23 84.87 81.00 TOTAL CPU% 100.00 100.00 100.00 100.00 100.00 100.00 From the above table values, one can see the accelerating revenue share trend by AMD as evidenced by the sequential very positive trend in quarter percentage revenue share gains of 0.36, 0.48, 1.44 and 3.36. By extrapolation, one might anticipate that a 3.87 revenue share gain in Q1, which implies $1.5B in Q1 revenues might even be conservative. (Dirk's snowball looks to be gaining size fairly rapidly and looks to have quite a ways to go before reaching the bottom of the hill.) ;-) As we know, INTC has repeatedly refused to acknowledge share loss to AMD over the past year, that is until their recent 2nd downward revision in which they acknowledged (and you gotta know it had to be based upon irrefutable evidence for them to do so) loss of share to AMD as a factor in their $1.3B falloff from Q4's $10.2B revenues. Obviously, such significant positive share gains as we are now seeing will become increasingly difficult as AMD approaches 40% share, but for Q1, especially given INTC's acknowledgment, I'm not anticipating any decline (i.e. minimum 3.17 revenue share gain in Q1). Interestingly, there seem to be 3 camps out there when it comes to Q1 estimates: 1) Those who see AMD falling off in Q1 as much or more than INTC Q1 and consequently revenues in the $1.1B range and eps in the $0.20 to $0.30 range. (This gang has been instrumental in driving AMD's price down $9.00 to $33 off its recent $42 high.) 2) Those who see AMD coming in within current guidance in the $1.1B to $1.35B range and an eps in the $0.30 to $0.40 range. (These see AMD recovering to $42.00 if group (1) is shown to be off-base by Q1 results.) 3) Those who see AMD coming in with $1.35B to $1.6B in revenues and an eps in the $0.40 to $0.80 range. (These expect a 30% to 50% pop in AMD's price off the currently ridiculously valued $33, hence knocking out the all-time high of $48.50) The Wall St. mafia (WSM) are in the 1st camp, you and many others fall within the 2nd group, I believe, while some others (me anyway) fall in the highly optimistic 3rd grouping. PS. I'm expecting a run on pencils after AMD's Q1 results are posted, as analysts, as was the case last year, scurry to significantly upgrade 2006 estimates to the $2.00 plus mark. (A $0.50 Q1 would push many into the $2.00 to $3.00 eps camp for 2006)