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

To: Kevin K. Spurway who wrote (31535)	4/8/1998 6:20:00 PM
From: AK2004	Respond to of 1571101

Kevin, All - Intel's pain I agree. Sorry for treating it as such. ABN was not terribly excited about AMD though. :-)) Below is something that should entartain us a bit. Regards -Albert 08:40am EDT 8-Apr-98 J.P. Morgan Securities (RAGSDALE, TERRY (1-212) 648-9047) INTEL: AMD LIKELY TO BE A FURTHER PAIN IN INTEL'S NECK April 8, 1998 J.P. MORGAN SECURITIES INC. - EQUITY RESEARCH TERRY RAGSDALE (1-212) 648-9047 Intel (Market Performer) AMD LIKELY TO BE A FURTHER PAIN IN INTEL'S NECK INTC Earnings Per Share P/E 52-Wk ------------------ ---------- MkCap 4/7 Rge 12/97 12/98 12/99 1Q/98 1Q/97 12/98 12/99 Yld ($MM) ---- ----- ----- ----- ----- ----- ----- ---- ---- ---- ----- $72.63 $102-64 $3.87A $3.15E $3.85E $0.72E $0.88A 23.1E 18.8E 0.2% $118,597 AMD's earnings yesterday (April 7) were well into the red as expected, but the bad news for Intel is that AMD appears to have fixed its much- publicized manufacturing yield problems. AMD has been manufacturing- constrained for the past three quarters and unable to meet customer demand. The company manufactured about 1.5 million K6 microprocessors in 1Q/98 but expects to ramp up to 12 million for the entire calendar year (down from previous expectations of 15 million), including at least 2 million in 2Q/98. Of course, AMD has made and broken many promises in the past, and it remains to be seen if this particular production ramp forecast will be met. As we discussed in our report initiating coverage of Intel last week ("PC Market Shift is a Big Bump in the Road," dated April 2), we see AMD and Cyrix not so much as a market share risk for Intel but rather as a pricing/margin risk. We expect Intel to do whatever is necessary (lower prices) not to cede significant market share to AMD and Cyrix, even at the low end; the question is at what cost. AMD CEO Jerry Sanders summed up our concern very nicely on the conference call yesterday: AMD's business plan is based on selling $100 microprocessors at 15-18% operating margins. Intel's business model is based on selling $250 microprocessors at 30-40% operating margins, and there is a large gulf between the two models.