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: A. A. LaFountain III who wrote (55152)	4/11/1999 4:26:00 PM
From: Process Boy	Read Replies (1) \| Respond to of 1572637

Tad - If I understand them correctly, the key issues surrounding AMD's stock boil down to execution and management credibility. I have a much easier time understanding disappointments arising from the former than the latter. Therefore, I find last week's announcement a source of substantial disappointment, since I believe that it more reflects senior management's inability to discern the scope and nature of the problem than the problem itself (even recognizing the probable subtleties of the design/manufacturing challenges). This is interesting, as it appears fundamental shift in your analysis, if I understand you correctly. I just find it interesting. I like to keep abreast of what the analysts are saying, if just to note and file. Thanks, PB

To: A. A. LaFountain III who wrote (55152)	4/11/1999 4:34:00 PM
From: Scumbria	Read Replies (4) \| Respond to of 1572637

Tad, Having been through this a few dozen times, I might share some insight with you. You do a FIB on a speedpath. You test the FIB'ed parts and run a MHz vs voltage shmoo. The shmoo looks good, and you send new masks off to the fab. Three weeks later new parts come along and show a different problem which was not present in the samples you FIB'ed. There is really no good way to predict these problems. AMD's management is faced with time constraints which make the public disclosure of these happenings unavoidable, but they happen at all companies. It is easy to blame the management, but it really has nothing to do with them. Scumbria

To: A. A. LaFountain III who wrote (55152)	4/11/1999 7:58:00 PM
From: Gopher Broke	Respond to of 1572637

Tad, <<such gains will face a tremendous discount from investors due to the credibility issue>> I think there are a couple of positive factors to consider. - AMD has achieved credibility when it comes to delivering on established product - the K62-350 is still a great chip at a great price. Deliver a decently performing K7 in some kind of volume and the incredulity will be short-lived. - They are the underdog and there are a lot of people out there who are rooting for them in the battle against Intel simply because of the enormity of the challenge they face.

To: A. A. LaFountain III who wrote (55152)	4/11/1999 8:58:00 PM
From: Mani1	Respond to of 1572637

Tad Re <<If AMD shipped 1.2 million units less than plan and not a single PC vendor complained about an inability to get processors,>> I am not so sure about "not a single PC vendor". During that time number of vendors in price watch, who offered K6 400, went down by about 15. Most had a limit of only 1 per order and prices actually rose. Friend of mine, who custom makes PC for small business, (along with services for maintaining web page, network etc.) could not get any k6 400 from a distributor since he buys in small volumes. Also I heard (not 100% reliable) from some one (do not ask me who because I can not tell) that HP had a shortage in K6 400's. Compaq, IBM and Gateway had priorities and that resulted in the current push of HP in its Celeron system. Tad as always I really appreciate your thoughtful posts on this board. Mani

To: A. A. LaFountain III who wrote (55152)	4/11/1999 10:53:00 PM
From: gbh	Read Replies (2) \| Respond to of 1572637

What does this mean going forward? I continue to believe that AMD is likely to pick up share as a result of the product roadmap. Tad, it will be tough for AMD to pick up share until next year sometime, if ever. It will be next year until the .18 process comes on line. Until then, if the product mix shifts more heavily to K6-3 and K-7, which it has to, lest AMD go out of business, AMD will only be capable of producing far fewer total die, given the substantially larger die size of both these CPUs. With this product shift, AMD can't hope to gain share. The question is, can they really sell $200 to $400 CPUs on there own merit, without this unwinnable price war strategy? If they are successful, the company will become profitable again while losing share. I believe this is the strategy they will take. They will cede the low end to INTC, who will gently raise the the low bar to $100-$120 minimum. They can still make good margins here, unlike AMD. the new battle ground will be the mid range. I think INTC and AMD will be at price parity here, and AMD will abandon its 25% pricing strategy. INTC won't fight so hard here, unless AMD takes better than 10% share in this segment which will be nearly impossible given their relatively limited total capacity. But they should actually be able to be profitable. As for consistent growth, once they reach profitability, I can't envision any scenario that makes a case. Gary