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

To: Brian Hutcheson who wrote (40809)	11/4/1998 11:50:00 AM
From: kash johal	Read Replies (1) \| Respond to of 1572963

Brian, They are going to lo-ball the earnings this quarter IMHO. Q1 99 will be a transitional quarter so they will beat expectations of 15 cents with say $0.25. Then they still have coverage for Q1 99. The key is for them to be consistent, show an earnings ramp, sales ramp,speed ramp etc and the stock will be $48 before you know it. If they blast off this quarter and then Q1 99 is substantially less that will kill the stock off again. So given the choice of $0.50 this quarter and $0.25 next quarter or the reverse you know which way they will play the game. It's easy to shove sales,revenues,expenses by 1Quarter. So I am looking for the stock to hit $30 this quarter. And to keep rocketing into the $40-50 range in Q2 if they really deliver the K7 at good speed grades and if Dresden comes on line quicker than they have announced.. Regards, Kash

To: Brian Hutcheson who wrote (40809)	11/4/1998 12:17:00 PM
From: Crossy	Read Replies (4) \| Respond to of 1572963

Brian, thanks for Your comments. Fab 25 outfitting is one remarkable job but the REAL boost will come next year from Fab 30 in Dresden. I wonder what the ASP from the K6-3 and the K-7 might be. Let's approach this indirectly. I assume that K-7 is positioned against Katmai & Xeon, whereas K6-3 is positioned against midrange Pentium-II. This should mean K6-3 should be targeted in the $200-300 range. Whereas K-7 will be placed into $500-600 and/or $800-900 segment according to the cache used. The analysts feel that 2 million K7 will be sold next year. At an ASP of $600, that would mean $1.2 billion just for the K-7 alone. My personal favourite is PSR analysis (PRice to sales ratios). Historical data (TTM - trailing 12 months) shows sales level at $2.28billion, or $15,8 per share. At the current $25 price, that means a PSR (price to sales ratio) of 1.56. INTC on the other hand commands a PSR of more than 6. Reason: differential in profitability. Well, with the underlying factors changing, AMD should be able to expand sales nicely: Let's assume for 1999 (Q1-Q4) - optimistic assumption.. K7 .. 2million units, ASP $600 -> 1.2 billion sales K6-3 ... 15 million units, ASP $200 -> 3 billion sales K6-2 ... 20 million units, ASP $100 -> 2 billion sales NON CPG business -> $300m per quarter -> 1.2 billion sales $ 7.4 billion sales possible, $51 Sales per share. Now if we take the OLD PSR multiple of 1.56, we arrive at a target price of $80. If AMD manages to become REALLY PROFITABLE (net margin > 10%) then we should also expect expansion of PSR multiple as a possibility. Probable to around 3 for the time being. That could lead to a target price of $240 <g>. If we just think that the current sales level can be HELD - no growth underneath - then we would yield sales per share around $20. That in turn would warrant stock price of $30. I know this would be a large step ahead and moves like that aren't done in one day. I admit I feel tempted to sell at $30. OTOH, with possibilities like the thing above I have doubts when to sell <g> best regards CROSSY