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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (72844)	2/4/1999 10:51:00 AM
From: Mary Cluney	Read Replies (1) \| Respond to of 186894

GVTucker, >>>He upgraded near the end of December<<< Since you are Kurlak's most ardent and articulate defender on this thread, could you please tell me what his thought processes were when he upgraded AMD in December? What happened between then and now that has made him change his mind? Did he think, back in December, that Intel was going to give AMD a pass and not respond to competition? Regards, Mary

To: GVTucker who wrote (72844)	2/4/1999 10:57:00 AM
From: Iris Shih	Respond to of 186894

He also upgraded amd to strong buy around 27~28. Now he downgraded it when it was trying hard hanging around 19~20. Give me a break. I don't need such analyst. Iris

To: GVTucker who wrote (72844)	2/4/1999 12:14:00 PM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

GV - Kurlak Upgrades AMD "We have greater confidence in the ramp up of the 350 - 400 MHz chips but are cognizant of competitive price pressures. We expect other analysts will gain more confidence in AMD management's ability to execute their business plan as evidence of improving mix materializes." Paul {===========================} 07:17am EST 28-Jan-99 Merrill Lynch (T.Kurlak/J.Osha) AMD ADVANCED MICRO:Management Contact ML++ML++ML Merrill Lynch Global Securities Research ML++ML++ML ADVANCED MICRO DEVICES (AMD/NYSE) Management Contact Thomas P. Kurlak (1) 212 449-2308 Joseph Osha (1) 212 449-0930 28 January 1999 ACCUMULATE* Long Term ACCUMULATE Reason for Report: Update Price: $21 1/4 Estimates (Dec) 1998A 1999E EPS: d$0.72 $1.55 P/E: NM 13.7x EPS Change (YoY): NM Consensus EPS: $0.85 (First Call: 25-Jan-1999) Q1 EPS (Mar): d$0.39 $0.18 Cash Flow/Share: $2.55 $4.80 Price/Cash Flow: 8.3x 4.4x Dividend Rate: Nil Nil Dividend Yield: Nil Nil Opinion & Financial Data Investment Opinion: C-2-2-9 Mkt. Value / Shares Outstanding (mn): $3,187.5 / 150 Book Value/Share (Dec-1998): $13.41 Price/Book Ratio: 1.6x ROE 1999E Average: 11.6% LT Liability % of Capital: 40.0% Est. 5 Year EPS Growth: 15.0% Stock Data 52-Week Range: $33-$12 3/4 Symbol / Exchange: AMD / NYSE Options: Pacific Institutional Ownership-Spectrum: 42.6% Brokers Covering (First Call): 23 ML Industry Weightings & Ratings** Strategy; Weighting Rel. to Mkt.: Income: Underweight (07-Mar-1995) Growth: In Line (06-Apr-1998) Income & Growth: In Line (06-Apr-1998) Capital Appreciation: In Line (26-Aug-1997) Market Analysis; Technical Rating: Above Average (25-Jul-1997) Intermediate term opinion last changed on 25-Nov-1998. *The views expressed are those of the macro department and do not necessarily coincide with those of the Fundamental analyst. For full investment opinion definitions, see footnotes. Investment Highlights: o Improving production mix raises confidence in 1999 outlook but pricing appears more competitive. Fundamental Highlights: o Yields on 350 - 400 MHz processors are up. o Expect mix shift to 75% 350 - 400 MHz parts in Q1 from 34% in Q4. o Estimate 6% ASP increase in Q1. o Competitive pricing pressures temper full year ASP increase, but expect $100+ in second half. What Has Changed? The following review of the AMD yield situation is based on a recent top management interview and presented as background and analysis for investors reviewing Q4 results and the Q1 outlook. During Q4, AMD produced about 400,000 K-6 II 400 MHz processors out of total production of 5.5 million units, up 45% sequentially. This was essentially the numbers of 400's management planned to make. However, obtaining that production level revealed a sensitivity to clock speed of one circuit element in the design. This sensitivity made those chips not running at 400 MHz fall off all the way to 300 MHz, thus causing a shortfall in production of chips running between 350 MHz and 380 MHz. In Q4, the 350 MHz range became the meat of the low end PC market and AMD produced only 60% of their goal. Consequently, AMD's production was skewed to low and high speeds and, given that the 400 was just ramping up, they were not offsetting and the overall ASP declined due to mix by about 11% sequentially to $89. This prevented AMD from having an upside surprise in earnings that many investors had expected. The fix in the design of the 400 was implemented about three weeks into production, which means affected wafers will still make up a portion of Q1 output, all in January. Production of 400 MHz parts is estimated at 1.5 million in Q1 or 27% of total units of 5.6 million compared to 7% in Q4. The affected 350 - 380 MHz parts totaled about 1.43 million units in Q4 or 26% of total units and we project an increase in Q1 of over 85% to about 2.7 million or 48% of total units. All together, parts running at or above 350 MHz (which sell for $80-$125) will comprise 75% of Q1 production compared to 34% in Q4. Assuming continued downward competitive pricing pressures, we estimate AMD's mix shift in Q1 will raise ASP by 6% to $94.25. This increase will allow for about a 5% sequential overall revenue increase in Q1 compared to Q4 on essentially flat units. Therefore, AMD should show a similar or better sequential sales and earnings trend in Q1 to that of Intel in what appears to be a better than normal Q1 PC sales environment. Both companies will display their projected 1999 earnings growth in subsequent quarters when seasonal demand patterns and new products combined for higher sales levels. We have no changes to make in our AMD earnings estimate for 1999, which is $1.55 a share. We have greater confidence in the ramp up of the 350 - 400 MHz chips but are cognizant of competitive price pressures. We expect other analysts will gain more confidence in AMD management's ability to execute their business plan as evidence of improving mix materializes.