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

To: Scumbria who wrote (46364)	1/17/1999 12:52:00 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 1571808

RE:"I still don't understand where the idea that AMD had "production problems" came from. The K6 family has moved up in MHz at a remarkable rate, well above the industry average."... Earth to Scumbria. AMD had to dump 800k-1 million, CXT core, AFR66 chips (300/333) for $35-40 that were supposed to be 350 and higher. These were supposed to go to Gateway, IBM, HP etc as high speed chips. The good news is that they didn't have to dump them in the trash can. The bad news is that ASPs went in the dumper because of it. Look for them in an E-MACHINE in a retail outlet near your in the very near future. Bet on it... Jim

To: Scumbria who wrote (46364)	1/17/1999 6:24:00 PM
From: RDM	Respond to of 1571808

Scrumbia makes a good point and I have a few of my own. 1. AMD did deliver 400K parts at 400MHZ. This is a lot for the first few months. They maybe could have had more with a perfect design, but who has ever heard of a first design without slow speed paths that can be tweaked for for a speedup. 2. One year ago AMD was shipping on a few parts due to a genuine production problem. Now they shipped 5.5 million in a quarter. This is short of a home run, but quite an achievement for everyone but the monday morning quarterbacks and the grumpy old men. 3. The profit differences being discussed as earnings surprise are really quite trivial (2% of sales). When you compute profits you subtract two big numbers, sales and costs, to get the answer. For AMD 1% of sales or cost change is $.05 in EPS change. With issues of mix and price there are very few people inside or outside the company that "know" or can predict the quarterly sales within 1 or 2 percent before the last day. In a more profitable situation (if earning were 20% of sales) then then situation is quite different and an error of 50% in earnings means a 10% change in sales or costs. Said another way the analysts would have been less upset with a $.10 earning surprise if AMD was earning $1.00 per share. 4. AMD has closed the speed gap with volume shipments that is critical to increasing the ASP. The K6-3 will likely ship this quarter closing the gap further. The 450 Mhz K6-3 shipping at the end of Q1 in volume should be quite similar to the 500 Mhz Pentium III. 5. While December Frys Ads were an early predictor of the 400 Mhz the problem, the current ads show AMD to be strong (3 Machines AMD, 1 Machine Cyrix and 1 Machine Intel). AMD laptops at 300 Mhz suddenly are sold everywhere. 6. Personally I hold both AMD and Intel. AMD market cap is $3B (price to sales approx 1:1) and Intel market cap is $250B (price to sales approx 9:1). I like to buy low and sell high. Selling high means selling when the average investor says buy. Buying low means to buy when the average investor says sell. My sense is now is the time to lighten up on the size of my Intel investment and increase the size of my long term investment in AMD shares. I think that if I can get $150 per share for Intel in the next few weeks from the euphoric analysts then I well sell half of my Intel that I have held since 1988. Sorry for such a long post, but the Broncos game has been slow.