Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Plissken who wrote (199630)	5/31/2006 7:37:38 PM
From: dougSF30	Read Replies (2) \| Respond to of 275872

Exactly. Those of us who bought AMD just as the K7, and then as the K8 was coming did well. Now Intel is doing the same with Core2 and a beaten-down stock.

To: Plissken who wrote (199630)	5/31/2006 7:44:03 PM
From: firthoffourth	Read Replies (1) \| Respond to of 275872

I think a lot of people (or maybe just one VERY loud person:) have/has lost sight of the forrest and are/is entirely too focused on a few trees. Lets assume by the end of 2007 K8L/bulldozer and CORE2 are competitive (+/- 10%). AMD should be able to supply 40-50% of the market with a fraction of the workforce and only 2 fabs (+ some output from CHRT) not to mention significantly smaller die sizes. For Intel to compete they will need either significantly higher ASPs than AMD or a massive headcount reduction. At this point it is difficult for me to see how they are going to get a premium over AMD in the ASP department assuming the maret is free/open and the products are competitive. QC servers will cause Intel a lot of problems in the 2 socket space and it will be a miracle if they sell any chips destined for 4 socket systems. A 6 month performance advantage, even if they get it, will do little to offset the long term problems Intel is facing. They need to take the pain now or it will be worse later on. You only have to look as far as the current state of the US economy to see what happens when you put off the inevitable.

To: Plissken who wrote (199630)	5/31/2006 8:02:09 PM
From: Petz	Respond to of 275872

50 reasons not to buy ATI: thestreet.com A sell-side analyst pronounced the merger "likely" in a research report on Wednesday, giving a big boost to ATI's shares. But other analysts familiar with the graphics chip market say investors are making much ado about nothing. "sell-side analyst" -- When interviewed, he said he had a "buy" on ATI. Why am I suspicious that he might have a SELL on AMD? "Forget it," says Jon Peddie, founder and analyst of Jon Peddie Research, an industry consulting firm. The report "is such a waste of time." Apjit Walia, an analyst with RBC Capital Markets, based his merger projections on channel checks in the "PC food" chain. Speculation about a merger between one of the graphics-chips makers such as ATI and one of the microprocessor manufacturers such as AMD has a long history, acknowledged Walia, whose firm has not done any recent investment-banking business for ATI or AMD. But Walia's research indicates that this merger is actually going to happen, he wrote. However, the analyst gave no details in his report about what he'd heard or who he'd heard the rumor from. Instead he simply argued that a deal would "make sense." "The synergies of this seem consistent with the recent announcements by AMD to significantly increase capacity over the next few years," Walia said in the note. ME: I think this Walia guy is arguing like this: "My channel checks say that demand for AMD processors is going to drop like a stone. By buying ATI, AMD will be able to keep its factories humming..." But a deal between the two companies could take many forms other than a merger, including a partnership or a joint venture, Walia said in an interview. Whether a "tie-up" between the two companies makes sense or not, Walia said he's just reporting what he has heard. "The proof's in the pudding," he said. "Let's let time pass and see how it works out." The report was enough for investors. Shares of ATI closed up $1.36, or 9%, to $16.51. Earlier in the day, they traded up as much as 10.3%. Shares of AMD closed up 41 cents, or 1.4%, to $30.98. ATI spokesman David Erskine dubbed the report about a possible merger a rumor and said the company doesn't comment on rumors. An AMD representative did not return a call seeking comment. ME: We've speculated here about "tie-ups" -- like AMD leasing part of Fab 30 to NVidia after 36 is ramped. But the announcement of the eventual conversion to 65nm, IMO, makes anything like that extremely unlikely. And why make a deal with Chartered to build CPUs when you're using some of your own capacity to make low-margin GPU's? You can read the rest of it. Peddie also points out that AMD doesn't have an abundance of cash, given that they need 2.5B to expand the fabs. And they quote an unnamed analyst who says the following: Ostensibly, by acquiring ATI, AMD would be getting a new product to produce in its chipmaking plants. But AMD's problem in recent years hasn't been under-using capacity; it's been that it can't make enough of its own chips to meet demand, says one technology analyst at a financial services firm who has closely followed the graphics-chip market. "They would kill their mother" to get more capacity, says the analyst, who asked not to be named, but whose firm has not done investment banking for either company. AMD is building new capacity, but it's able to sell its own chips for a gross profit margin of about 60%. In contrast, ATI's chips have a gross margin of around 30% or so. It would make little sense for AMD to fill up the capacity of its new plants with chips that have lower margins than its own processors, particularly when there's such strong demand for its own chips, the analyst says. "AMD is not in any way short of things to fill its fabs, especially low-margin things," says the analyst. "The logic of it doesn't make sense." And no one even mentions the problems with NVidia that would likely result. Petz