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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: exhon2004 who wrote (26622)	12/9/1997 1:51:00 AM
From: kash johal	Read Replies (1) \| Respond to of 1572758

I agree wholeheatedly about Sanders. This guy is a salesman (an extremely good one but a poor CEO). I looked at AMD earlier (around time of IBM using k6 announcement) and I chose not to invest at that time. The problem is that the company has bet the farm on killing intel, and it's other businessess Flash, Vantis are in the crapper from a margin standpoint. If they start producing 2-3M k6's/month and Cyrix starts producung 2-3M MX/GX per month and IDT producing C6 we could have an oversupply situation. The market will be running at less than 10M units/mo and worldwide mfg capacity of x86 processors could be running 15-20M pcs/mo. Just take a look at the disk drive biz, the flash biz etc and you can see that volumes may be up but prices will drive down to sub $100. At this rate you have crappy prices AND underutilized capacity. In this potential scenario NSM is best investment short term IMHO for the following reasons: 1) x86 revenues will be <10% of total. 2) Rest of their business includes siginicant cash cows in analog/telecomm markets. 3) Their capacity is incremental as they will use IBM for wafers. So they do not have a hige fixed fab cost. 4) The GX with it's next iterations can be a 50% margin product even with an ASP of $60 in 0.25 micron. At least short term (next 6 months) they can have a profitable earnings bump from GX. AMD may see a stock runup when Compaq deal is announced but the real valuation will be done based on earnings. I think q4 97 will be a loss and q1 98 probably also will be in the red. Q2 98 may be a good entry point on this stock- there again if we get into a price war then I will stay away from AMD. Sorry for the long wided response. Best Regards, Kash.