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

To: Petz who wrote (201445)	6/9/2006 5:35:51 PM
From: AK2004	Read Replies (1) \| Respond to of 275872

Intel's rating declined from 4.18 in Jan to 3.6522 now AMD's rating increased from 3.18 in Jan to 3.2727 now

To: Petz who wrote (201445)	6/10/2006 10:19:59 AM
From: niceguy767	Read Replies (2) \| Respond to of 275872

I figure, with all the Conroe hype out there, that Pru is having a terrible time penetrating the same ether with its financial estimates. After clearing away all the Conroe hyperventilating, much of it emanating from the trio in our midst, INTC's FY06 financial prospects have progressed from dim, pre P4 price cuts, to downright frightening. FY05's total CPU (i.e. AMD + INTC) revenues came in at $32.0B, AMD with $3.8B (11.9% Revshare) compared to INTC's $28.2B (88.1% Revshare). The real news for last year, though, was the acceleration in AMD's quarterly Revshare from 9.85% in Q1/05 to 15.13% in Q4/05, resulting in accelerating earnings for AMD from Q1/05's negative $0.04 eps to Q4's very positive $0.45 eps. If AMD's Q1/06 Revshare of 17.2% (i.e. an increase of 2% over Q4/05's 15.13%) is any precursor of FY06 Revshare trends, then AMD could attain $6.0B in FY06 revenues. Assuming FY06 total CPU revenues remain at $32B, then $6B AMD revenues equates to an AMD FY06 Revshare of 18.5%, up from FY05's of 11.9% Revshare. Obviously, AMD's Revshare gains have caused matters at INTC to reach panoc mode as evidenced by the desperate P4 price cuts and the sell off of any available assets to meet the suddenly imminent prospect of negative cash flow at INTC. As some in our midst have already pointed out, INTC risks having to undergo a very painful metamorphosis if it can't stem erosion right now as an AMD Revshare of 25% (annual) or better permanently alters their monopoly status thereby eliminating many of the economic advantages (some illegal, according to AMD allegations) that accompany a monopoly grip on a market. I suspect that the current "panic state" at INTC has been precipitated by P4 revenues that have dropped off the cliff in Q4, and the consequent bleak outlook for INTC's Q2 which, if your analysis is correct, will see AMD eclipse the 20% quarterly Revshare hurdle for the first time in its history...again setting off the alarm bells at the monopoly headquarters of INTC. Can INTC stop AMD from reaching 25% annual Revshare? I doubt it as I'm in Dirk's camp which is calling for 33% marketshare by Q4 2008, which in all likelihood will see Revshare well above 25%. The dynamic INTC trio in our midst are going to have to post much more frequently if they are to continue successfully masking the "financial crisis" now in place at INTC, one which may grow much, much worse if Dirk is right and AMD attains 33% marketshare in 2008. P.S. (I can only assume for Dirk to express such optimistic marketshare objectives, that he is sandbagging bigtime right now (i.e. a Conroe killer ready to go when called upon)or he knows that Conroe production glitches preclude any Conroe prospect of reversing AMD's current Revshare momentum...) PPS. (I figure that for AMD to achieve 30% dervershare by Q4, incremental server revenues will have to increase by about $75M in each of Q3 and Q4 resulting in a Q4 server revenue increase of $150M to $200M from Q2 levels. I also anticipate that AMD mobile revenue gains will more than offset revenue losses, if any, in Q3 and Q4.) Summary: INTC profit margins, with the P4 price cuts, are poised for a test of the 45% mark, if not 40%. Owing to INTC's size, there may be some impact on AMD profit margins which will be greatly mitigated by the increasing mix of higher margin notebook and server revenues in the revenue mix. In fact, AMD's profit margins are very likely to remain above 50%, perhaps even 55%, as INTC's scorched earth pricing model attempts to block an AMD Revshare of 25% or better. AMD's gross margin was an outstanding 58.5% in Q1 vs. INTC's 55% which signaled that INTC's behind the scene activities were unsuccessful in stemming AMD momentum. Even if AMD's gross margin drops to 50% in response to INTC's, no longer behind the scenes cut throat activities, AMD will post about $600M in FY06 profit, assuming $6B in revenues. INTC at 45% gross margin on $8B revenues in Q2 will be perilously close to posting a loss, should INTC financials have deteriorated to that extent. (No wonder INTC is suddenly attempting to sell off anything it can!)