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.

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

To: tommy parks who wrote (31578)	4/9/1998 12:56:00 AM
From: Maxwell	Read Replies (1) \| Respond to of 1580396

Tommy Parks: <<What amazes me even more is that when a company says its going to seek a second stock offering people dont understand that AMD is going to be worth even less.>> You need to take a business course man, especially finance and accounting. Let me give you an introduction. AMD's book value per share is about $17. If AMD goes out and sell 30M shares today and gets $27/share they are actually making a profit of $10/shr. This extra $10/sh * 30M shrs = $300M revenue is RETAINED EARNINGS and added back to AMD assets. As a result the BOOK VALUE/shr INCREASES. Offering more share through second stock offering is also know as dilution. Dilution can either be good or bad. It is bad if that money raised can't be put to use to make more money. It is good if that money generates more money and especially if the return of equity is higher than normal. AMD is profitable in flash and communication (not sure on Vantis). Computer Product Group (CPG) is losing money because AMD can't produce enough volume K6 to overcome fab fixed costs. To produce more AMD must solve the yield issue and IT IS DONE. To get more wafers AMD must buy more equipment and fabs. To achieve the later without going into debts, second stock offering is the best if the shareholders approve. Thus the last piece of the puzzle is found. Maxwell

To: tommy parks who wrote (31578)	4/9/1998 1:06:00 AM
From: Adrian Wu	Read Replies (1) \| Respond to of 1580396

tommy: How can AMD be worth even less if they are receiving equity instead of debt? Equity financing is preferable to debt financing; you don't have to pay interest for one thing. The book value also rises since the shares sold will be at a higher value than the current book value/share figure. Share dilution here means a lower net loss/share. What is so bad about that? Adrian

To: tommy parks who wrote (31578)	4/9/1998 3:32:00 PM
From: Petz	Read Replies (4) \| Respond to of 1580396

Tommy Parks, The AMD bulls on this thread believe that most of the analysts are not dealing with reality. For example, take Soundview Financial. Here's their estimates for # of K6 processors in '98 Q297A Q397A Q497A Q198A Q298E Q398E Q498E 486 units 0.725 0.5 .2 0.1 0.05 0 0 K5 units 0.7 0.4 .1 0.1 0.0 0 0 K6 units 0.375 1.0 1.5 1.55 2.1 2.7 3.5 Lets look, for example, at the 2.7 million and 3.5 million estimates for # of K6's in Q3 and Q4. It takes 9-12 weeks from when a wafer is started to when a sale of finished processors is booked, so the number of CPU's produced in Q3 is determined by the wafers being started NOW. That number is 3,000 per week, half of them on the 0.25u process and half of them on the 0.35u process. AMD is getting at least 140 good CPU's from each 0.25 wafer -- this figure has been verified by at least 3 analysts. Lets be pessimistic and assume yields are only 40% in the older 0.35 process, 60 good CPU's per wafer. AMD said the first week of May would be the last week they start any 0.35 process wafers. So the total 0.35 wafers will be 4 weeks-worth, or 6,000 wafers, which is 360,000 K6 (0.35u) CPU's. For the 0.25 micron output, they have 4 weeks with 1500 wafers followed by 9 weeks averaging 2500 wafers (allowing for equipment turnaround time). This is a total of 28,500 wafers, or a total of 3,990,000 K6 (0.25u) CPU's. So the grand total is 4,350,000 K6's, mostly 300 MHz or faster K6's and K6-3D's, over a MILLION MORE CPU's than Soundview's estimate. I didn't even mention Q2 or Q4, but you get the picture. Petz