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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Judy who wrote (6857)	3/31/1998 3:50:00 PM
From: Crossy	Read Replies (1) \| Respond to of 120523

Judy, I really think the yield problem is resolved right now. I know for sure that it wasn't a problem regarding the manufacturing process but rather a problem of the mask design (the "Stepping version" of their CPU) that caused the bad yields. As I see it, their American Fabs will be able to crank out 3 million per quarter, even more when they will be all converted to quarter micron (0,25 um) linewidth. This should enable them to increast output in all converted fabs by at least 70% (rough estimate..). Also right in line fits the IBM second soruce pact which should go into full effect later this year down the road (expect an impact in Q3). The new FAB in Dresden, Germany should further double the production. With that investment in place they could become a viable Intel contender. (This shouldn't be good for INTC margins & their stock price). I have to say I missed this one - I was thinking about entering AFTER their quarterly (when the bad news should finally all be released and expectations are lower - unbeatable low that not even Mr. Sanders would be able to disappoint them <G>). However the stock ran up too son for me, in anticipation of the better times to come. I believe that the company will post a far greater loss for this quarter - this could be another entry opportunity, though - I really recommend to play this one safe and entry after the bad news is all vented off... Another weakness IMHO is the positioning of its current CPU, the K6-3D. Business power users (like myself) )have almost nothing to gain from this chip besides its speed. The FPU performance is not improved relative to the original K6. The next one, dubbed K6-3D+, due late Q2-Q3 should adress this, but thise means that AMD currently goes for the PC-segment ZERO, which is not where the fat margins are. So this meanst AMD should become a better play down the road IMHO. Also people speculate about a takeover, many cite IBM as an interested party. That's not my opinion. I feel, CPQ has a much better chance for a buyout. Already, there are some links between AMD and CPQ (because of a license with DEC) regarding the upcoming K7-design (remember: this will use the EVB-bus protocol ! devised by DEC for its alpha). Would make much more sense from a strategic perspective... TA right now I can't give much advice (my TA software will be ready next week)- my only take is that it should have significant support in th low 20ies. Summing up: my take on AMD : buy on dips (in the low 20ies) at or after earnings, could be a 3-6 month play worth the investment. Anyway let me just point out that the capacity problem IS resolved right now (if You think that 3 million CPU per quarter are Your target). Dresden will add extra spice. best wishes CROSSY