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Thanks to the saxman
http://english.eastday.com/epublish/gb/paper1/1351/class000100001/hwz205789.htm
It looks like a few conclusions can be drawn directly from this news.
1) Sales outside of NA are going to be much more important. Possibly approaching 90% of AMDs sales. By extension, macro economic effects in the West are going to much less important to the health of AMD.
2) 90nm is probably at least meeting expectations.
3) 1m new sales for AMD is a very big deal and indicates new capacity is coming online.
4) AMD seems intent on bringing the war to INTC on all fronts, which seems to be a divergence from recent policy of attacking the high end mainly.
5) AMD seems confident enough in its' production capability that it's more willing to take on INTC on a purely price basis, besides having a superior product.
6) As AMD approaches full capacity margins should improve, even at lower ASP's, since AMD's fix cost structure means any extra volume is essentially gravy. Given the extra, no cost, capacity coming online and the ability to better use that capacity AMD be able to compete with INTC on a more level basis taking cost as the only factor.
Sounds reasonable. The odds seem to be in INTC's favor that they will get something right sooner or later.
Weekly recap.
http://www.investors.com/breakingnews.asp?journalid=22448934&brk=1
Intel (INTC) will not deliver a 4 GHz version of its Pentium 4 processor until the first quarter, pushed back from expectations that the chip would be ready in the fourth quarter. See full story.
Also, CNet reported that Santa Clara, Calif.-based Intel's top-speed P4, operating at 3.6 GHz, is in short supply and that its Lindenhurst server chipset has a flaw related to PCI Express plug-in cards.
These reports follow a product recall of Intel's Grantsdale chipset earlier this year, along with the delay of an earlier version of its Pentium M, known previously as Dothan.
Last week, Chief Executive Craig Barrett signaled he had had enough and sent Intel's staff memo challenging employees to focus on improving operations.
Intel's shares fell more than 1 percent at the opening bell, but they reversed direction to end up 0.6 percent to $24.38.
Earlier this month, the Dow Jones Industrial Average component bottomed at a one-year low of $22.46. For the year, Intel shares are down 25 percent.
Advanced Micro Devices (AMD), Intel's primary competitor for computer microprocessors, added 5.5 percent to $12.49.
Me...
Thanks to the Saxman again for the above link.
I guess we'll be finding out more about Nocona next week, but so far it still looks like an EPA superfund site cleverly disguised as a "McDonald's Playland".
Anyone know what ever happened to those tier2 Nocona servers/workstations that were supposed to appear in the week following the No-show/no-reviews release? The following article is dated 06/28/04 and coincides with the Nocona paper offering.
http://news.zdnet.co.uk/hardware/chips/0,39020354,39158859,00.htm
Them...
"A variety of manufacturers are expected to come out with workstations incorporating the chip on Monday, with most releasing servers at a later date. Some smaller specialty manufacturers are expected to release servers next week"
Me...
I wonder if the reason were not seeing product has to do with the Lindenhurst/Tum-wa-wa chipset or the Nocona processor? Probably both, INTC doesn't seem to be able to tie its shoe strings lately.
http://www.dvhardware.net/article2853.html
Them...
Intel is reportedly expecting to have the kinks ironed out of PCI-Express by the end of the quarter and to be shipping it in all its glory by then. Nathan thinks Q4 is more likely.
Those figures weren't mine, but straight out of the CC. Your right about the comparison though, something Niceguy seems to ignore frequently. AMD used to have 49.99 percent and Fujitsu the rest before the FASL merger. The formula change to the current 60/40 mostly because AMD added fab25 to the flash pie.
Thanks for the info. Ya, I now seem to recall reading something about that. They're going to use large caches(2meg), to make up for the reduced speed? That should soak up some of the extra capacity INTC has.
In the meantime what's INTC doing with all those extra low-bining chips it's getting because very few Prescotts seem to bin at 3.4ghz or above?
Take a look at the q2 CC.
http://epscontest.com/04q2eps/04q2_cc.htm
First, I'll start with our Memory Group
In Q2, sales grew to $673mm, up a strong 220% from Q2 2003 and up 7% over Q1
Spansion Flash memory sales grew in all major regions and across both the embedded and wireless segments driven by continued strong demand from Tier 1 customers
Memory Group tripled its operating income to $45mm
This is a $31mm improvement over Q1, on $45mm of incremental sales for a 69% fall-through
Memory Group's gross margin improved a couple percentage points in the quarter, due to the successful transition to 110-nanometer technology and benefit recognized from the integration of the AMD and Fujitsu Flash memory businesses
Me...
As far as I know there have been no autoritative statements about flash market share in q2 yet. There should be some soon.
Nit picking. I know very well the difference between IPC and ghz. Faster was used in the sense that k7/k8's run programs faster than INTC's best. But then you knew that didn't you?
Really, to me it doesn't make much difference whether INTC's chips suck because the have a lousy design or because they don't use SOI(though I suspect some of both). If it's true that the Prescotts suck because they have a bazillion stages and a gazillion transistors then why doesn't INTC just drop the hot potato and go with the Dotham you seem so happy with. Could it be that maybe that chip has problems of its own that only start to show up when the ghz is increased?
INTC's Prescotts have a stench worse than a 2 holer in the Sierras at the end of summer and the Noconas look to be able to apply for EPA superfund status.
Could it possibly be that bad news for INTC is good news for AMD?
No way!!!
How many times over the last couple of years have we seen the message "INTC's screw-ups are not AMD's screw-ups" delivered to deaf ears? Ironically, it appears that Barretts' highlighting of INTC's problems may have been the 2X4 needed to bash some sense into the market. Barrett, we love ya babe, don't ever go away.
Well if INTC does miss you know whose going to get the worse of it. Your probably right though, INTC seems to always have their ducks lined up bdfore the start of every quarter. Still, all these screw-ups have got to start hurting at some point.
The thing is AMD doesn't have to take much busines to do fabulously. With AMD a little goes a long way.
The question is will there be a chipset for Nocona, should it ever appear. I still haven't read a 64bit review yet and the smell of "Eau du stockyards" hangs heavy over the entire project.
Not trying to change the subject, but you guys are sounding just like the AMDers used to. I can still remember the days when all the AMD loyal could say was just wait until tomorrow. Having been on both sides I much prefer where AMD is now.
Well, I'm obviously not an Elmer, so I can't tell you why, but I can add 2 and 2 and it's pretty obvious that AMD's 130nm SOI process is producing chips that run faster than INTCs best. Further INTC seems to be unable to meet market demand for chips faster than 3.4ghz, even with the large number of fabs running at 90nm and 300mm. Further AMD seems to be making its' release dates and they seem to have plenty of head-room left in their fastest chips running on 130nm SOI.
We should see the first 90nm chips from AMD in the next few weeks. That would probably be a good time to rehash this subject.
I would think you would be much more interested in the answers to the questions you posed.
Does INTC have a 3.8ghz out yet? Last I remember reading something about it; the release date was q4. Given the apparent 3.6 problems INTC will have its' hands full just doing a 3.8ghz paper launch.
We haven't begun to see what AMD can do with 90nm yet. INTC really has fallen into the pigsty and can't get out. By h1 of next year the pressure on INTC should be horrendous, especially if MSFT gets out an AMD64 OS.
It beginning to look more and more like those rumors of AMD outsourcing are probably correct.
This should be enough to take AMD's stock back down tomorrow.
What BS, why doesn't McCarron just say INTC management screwed up and the reason INTC can't get their 90nm processes to scale is because they don't have SOI?
When will everyone stop making excuses for INTC and start calling a spade a space?
INTC's mid quarter meeting is going to be especially interesting. I can hardly wait to see Otellini squirming about as he tries to explain why INTC didn't meet its' revenue goals.
We may finally be getting a NiceGuy quarter.
No not off the top of my head. Perhaps we had not say more given that some seem to thik macro economics isn't germain to the board, let alone Gold Finger?
Kind of a slow day, posting wise. Maybe everyone is breathing a sigh of relief that AMD is finally having an up day? Nice to see AMD besting the SOXX for a change.
I did say gilding not gelding. On the other hand I don't think I would want my Lilly gilded either.
I would probably be willing to wait for the 90nm Semprons, if the price and energy usage are going to be much better.
It looks like AMD is in the process of reevaluating its timetables for almost everything. Maybe this is to continue putting pressure on INTC, or maybe it just because 90nm is going better than expected? It's very unusual to see a company pulling in a release, something virtually unheard of at INTC. Lately, INTC seems to be going the other direction, and AMD seems intent on just piling it on.
Incidentally, do you have any idea how many times a mask can be used, and what causes it to fail.
I'm not so sure the 754's will disappear as fast as most seem to think. It seems like the market is being segmented into relatively cheap 754's for the masses and expensive 939s for business/gamers. Lots of bells and whistles on the 754 Mobo and having a built in firewall seems like a very nice touch though I've already got a Netgear router/firewall.
I want to see how this whole Sempron thing shakes out. A low end 64bit Sempron would probably fill my needs for some time. The question is whether a 939 would be gilding the Lilly.
One way or another I'm due for a new computer here very soon, and I won't buy 32 bit tech. Actually, I need to replace both computers, but doing one now would probably be enough for awhile.
More INTC screw up stuff
http://www.usatoday.com/money/industries/technology/2004-07-28-intel_x.htm
ASUSTeK Intros New Athlon Mobo, K8N-E Deluxe
http://www.linuxelectrons.com/article.php/20040729063536552
Me...
Here's your horns and whistles Mobo.
Thanks to the Saxman.
Increasing MoBo demand
http://www.digitimes.com/news/a20040729B2070.html
Some of INTC's problems, probably not the most serious.
http://www.nwfusion.com/news/2004/0728barretells.html
This has not been a good year for Intel. The company has experienced problems moving to a new 90-nanometer process technology, causing a delay in the release of its Dothan and Prescott microprocessors.
In June, the company recalled some of its 915 G/P and 925X chipsets because of a flaw in the I/O controller that prevented some computers from starting normally.
This came a month after the company scrapped plans to build two future processors -- the next-generation Pentium 4, called Tejas, and a future Xeon successor called Jayhawk -- in favor of new designs.
Well I certainly haven't hid my dislike for INTC management. Typical BS, management screws up and blames it on the troops. To me this is very indicative of character flaws that creep into the management of most successful companies a couple of generations after the guys that did the work are gone.
One would think it would be easy to keep mining a gold mine, but for some reason, very often, the crud seems to float to the top of management in successful companies. It seems that it takes different skills to rise in a company once the hard work has been done.
I think that's going to be Jerry's legacy. Jerry wasn't perfect, but he had a good eye for managers. AMD is now in the golden spot management wise. Hector and Jerry were, in a lot of ways, cut from the same fabric and while the way they express themselves is like night and day, both are fighters who know how to get the most out of their people. I think Hector is a better manager and much more technical than Jerry, but Jerry had a lot of strengths that were very important in the beginning of AMD. I think the way Jerry realized it was time to pass the baton, and got the hell out of the way once it was done says a lot about the man.
Contrast the willingness of Hector/Jerry to make decisions that more than once essentially “bet the farm” with the inability of INTC management to make any decisions, and then when they've been forced to, the decisions have consistently proven to be the wrong ones. Then to top things off they blame anyone but themselves. It's a shame, because the ones hurt the most are going to be the INTC employees.
Barrett chastising the troops
http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=5789353
Thanks to the Saxman
Just got back from an extended weekend, looks like the shorts are having their way with AMD again. So much for $11 holding. Noticed short interest dropped some though that did little good. Without buyers, in the short term, we are liable to stabilize here near death. The only cure for this malaise may be a Niceguy kind of quarter, we sure could use one.
Anyway, here's something to take your mind off the dismal market, PC vewndor ratings. Hope this wasn't posted while I was gone.
http://story.news.yahoo.com/news?tmpl=story&u=/ttzd/20040722/tc_techtues_zd/132035&cid=1739&...
Seems to me that this means 90nm is ready. Nothing else makes sense. I can't imagine AMD lowering A64 prices without the ability to supply the demand the price cuts should create. My worry is the chipsets, I hope NVDA has its act together.
This has got to be the best indicator we've seen yet that all is well in AMD 90nm land. It certainly sounds like Hector has moved the A64 dial to the right. My only concern is how this Sempron "marketing" move is going to work out. I hope there aren't too many bumps in the road. Maybe I'll get used to it, but this melange of k7 and k8 parts sounds confusing, not to mention the new performance labeling scheme. Anyway, it doesn't sound like the k7s are long for this world. Sounds like a big change in emphasis is occurring.
Thanks, I didn't get that.
It looks to me like the silicon investment group, which is mostly U.S. investors, is taking its cues from the U.S. economy. This doesn't seem to make much sense considering that well over 80% of AMD's business this quarter will come from places very removed from the U.S. INTC is also getting more and more of its' business from outside the U.S. So while I agree that the U.S. economy will probably be going through another slow down, the extrapolation of that slow down to AMD/INTC makes much less sense.
I know most Americans don't like to think about it, but this economy of ours has been living off the largess of others for way too long. If anything happens to disrupt the cycling of balance of trade $'s back into U.S. companies the $ could take even more of a hit than it has over the last 3 or 4 years.
My particular view is that the U.S. and Western European economies are going to be treading water while other parts of the world catch up economically. Expanding on that thought, the only way developed countries will be able to compete with developing countries is through the better use of P&E. That means better productivity, which means more use of automation, and at the heart of every automated system is at least one processor. There is nothing, of any complexity at all that doesn’t have at least one and probably many more processors at its core.
The above only covers the business side of processor use. The home entertainment/communications/automobile etc., etc. sides will be much bigger. It's not like the world of processors is going away, or even slowing down any. The only problem I see is the boom/bust cycle that has accompanied the semis in the past. It seems that the market is presently going through one of its patented knee-jerk reactions in anticipation of a slow down that may not occur. It's almost funny how most times when the investment community thinks they have a handle on what's going on, the market proves otherwise
Interesting discussion going on SI about a subject near and dear to us longs, earnings. As usual Niceguy is the unbridled optimist, but if there is one thing us AMD investors could use it's a Niceguy quarter.
However Pgerassi is taking a rather conservative approach. While he has taken into account a reasonable increment of new sales, given seasonality, he has ignored price appreciation in the CPG group due to a better mix of k8s and the effects of 90nm on costs across all products sold. Also, that 7 to 9% seasonality increase says nothing about new products, I'm thinking of laptop sales in particular which are supposed to be a bigger factor in q3.
Same sort of goes for flash. I expect lower costs as the move to 110nm continues and better ASPs as the move to mirrored bit continues. However offsetting some of the price increases could be the NOR price reductions we've heard about in the last couple of days. In this regard, I would tend to believe that AMD is better protected than INTC given AMD's emphasis on long-term contracts.
Personally, I think this is going to be CPG's quarter, one way or another. If there is any hope for a Niceguy quarter it will have to come from the CPG group though flash should contribute nicely also.
I didn't hear anything about increasing capex in the CC, unlike MG&A, but I'm sure AMD has a range of earnings it's shooting for. I tend to doubt that AMD will report more than $.25 in q3 no matter how good things are.
Me...
Another indication that AMD investment was $50m nothing about the percentage. Damn that Jerry could horse trade. Even when it looked like AMD might be getting the short end of the stick Jerry makes things come out smelling.
http://www.my-esm.com/printableArticle.jhtml?articleID=2916468
http://www.theinquirer.net/?article=4679
Ok this is closer to what I remember
http://siliconvalley.internet.com/news/article.php/1436901
In addition, AMD will invest $15 million and Fujitsu $10 million, for which the companies will recieve a 4.5 percent share in Saifun, the newspaper said.
Me...
Someone needs to check the 10q to see what AMD really got. Sounds like AMD got about 2.7% and fujitsu 1.8%? Still 2.7% of a billion would have done wonders for the q2 earnings.
saifun AMD
http://www.theinquirer.net/?article=4679
Actually, as I remember it AMd paid $25m for 5% of Saifun, I'll try to confirm. This could be a nice investment if Saifun goes public for $1B. Even 5% would pay for a lot of royalty fees.
Nice find
Looks like the "PC in a closet" may be nearing reality. This could really light a fire under the processor business.
Personally, I think the storage business should boom even more. With HDs down in the $50 range for 120GBs I'm surprised were not seeing someone package 10 or so of these beasts together. With 8 bits scattered across 8 drives and a parity bit drive you would have full recovery except in the case of multiple coincident failures. With another couple of drives in the box the system could automatically rebuild the bad drive and the user could replace the bad drive later. In fact I see no reason why the system would have to come down while the rebuild was going on. 8 120GB drives would give you almost a terra byte of storage for a relatively low cost.
Now add a 4 spindle R/W, 300 DVD, Blue laser, jukebox and put that system next to the A64 gateway/HD farm and connect it to the Internet and all the PCs/HDTVs/stereos/pocket communicators in the home and you've got a system that could fill most everyone’s media/communications needs. Well, we're probably still a ways off from that view, but it does look like progress is being made.
Now if we could just get the studios/music moguls etc. to agree on home recording rights.
PS; My knowledge of HDs is very dated. I don't know if 8bit plus parity is even used anymore in HDs. It's just a concept, but one that seems like it could be scaled up since I doubt parity bits have gone out of fashion.
INTC sales
http://story.news.yahoo.com/news?tmpl=story&cid=677&ncid=677&e=18&u=/usatoday/200407...
"China was one of Intel's strongest markets. Growth in India also was strong. Sales in North America were flat from a year ago."
ME...
I would expect that this pattern would continue. Most people in the U.S. already have a computer that works just fine for them. So in the absence of the next big thing (probably home media related) processor growth will become more dependent on third world growth. Not that the undeveloped world/developing world, along with normal replacement in developed areas, won't be a big enough market to keep things going. But if a 500mhz machine is good enough now, how long will it be before someone with a 3200+ A64 thinks they need something faster? Maybe we need MSFT to continue finding bugs that need ever-larger programs to provide a sense of security in the public. How's that for an upgrade path?
Anyway, just out of curiosity, I wonder how many people in the world have never seen a PC before, let alone owned one? From that point of view low-cost PCs are going to be critical to continued growth. This is probably Geode country. AMD is going to need to crank out a lot of something when fab36 comes online and the number of high end systems isn’t going to grow that much as 4,8,16 and larger way processors begin to replace the 1 and 2 way Xeons out there. In short a lot of the smaller machines out there today are going to be replaced by compact/low-cost blade systems, etc., and the cost of the replacement gear is going to be less than the boxes being replaced.
Outside of the business world, I expect to see a merging of PCs with communications gear in less developed areas and more application specific stratification/merging of PC and communications gear in the developed areas to tide us over. Think a gateway in the home and laptops scattered around the house communicating with the gateway wirelessly. Also, think universal communicators that can do everything that 3200+ A64 can do in a few years. Then think, how in the hell is that thing going to work?
My big concern is that with existing techniques software is getting so complicated no one will be able to control it. Hell, it was getting that way 10 years ago. Personally, I think software got us into the current mess, and I’m pretty sure it’s the only way we will get out. Problem is that I’m not sure people are smart enough, with present tools, to create the needed systems.
Agree. Most of the major problems I remember AMD having had to do with production. I think AMD is competent in that area, but despite the current problems INTC is having, INTC seems to execute better (no I haven't been drugged by Elmer). I certainly don't want to see another pony chip (mustang, palomino, etc.) type of debacle. Let INTC have the bleeding edge, with fab36 at 90nm AMD should have plenty of capacity to meet demand.
In fact, one of the disturbing things about the slow uptake on the k8's is that AMD needs to be increasing demand now to insure that there is a market for all those fab36 chips. About the only time Hector got animated in the CC was during his response to a question about whether there would be markets for fab36 products. He seemed to respond rather forcefully (for Hector) that there would. This sort of goes along with the fab36 speed up rumor.
Yes, that remains the big enigma. AMD clearly is having huge problems selling more product despite having a better product in most lines, and selling for less. TCO, which should be a big driving force, seems to be ineffective. It looks like when AMD products are priced similarly to INTC's the market goes with INTC even though the INTC products are inferior. Very strange.
As I've said before at this point in the cycle AMD is usually booming along. This is undoubtedly one of the major factors keeping AMD's share price down.
We can only hope that the progressive/disruptive technology AMD is pushing starts to take hold soon.
Yes I'm still waiting for that Nocona review. The essence of "eau du stockyards" still hangs like a pall on the product.
It's more basic than that. I still believe that INTC's em64 plan suffers from basic flaws due to the way INTC has tried to stratify 2 basically incompatible 64 bit technologies. I'm sure INTC intends to merge the 2 at some point, but for the foreseeable future they're leaving the middle of their belly fully exposed to AMD's claws.
Once the industry gets to the embracing stage for the new progressive/disruptive technology that AMD64 is, things will pick up quickly. I just hope AMD can meet demand at that point
I feel your pain. Believe me.
Nice work
Yes flash is doing great. The 70% incremental you calculated sounds about like what I heard yesterday. I assumed the cost reductions were due to the move to 110nm and better mix of mirror bit product though it sounds like we'll have to wait a bit longer for mirror bit to kick in. I think they said something like a double-digit increase this quarter, which should help ASPs. Another thing, I think this will be the first full quarter of 110nm production so that should also help with costs. Also costs of Mirrored bit flash are supposed to be some 15% lower than floating gate so the ramp should also help.
Processors are definitely the weak sister in the family. Ironically, these seem to have the most room for growth over the next couple of quarters. The move to 90nm should have a very noted effect on costs. Also the move to more k8s should increase the ASPs markedly. So besides the seasonal increase in units AMD should enjoy lower costs and higher prices on what it sells. One other thing as CombJelly noted, it seems that both EMachines and HPQ really underestimated demand for A64's in q2 something I doubt they will do again.
All in all I'm expecting nice boosts in Gross Margins for both flash and processors with processor cost reductions more dependent on how fast the 90nm conversion goes. I would say the $.19 is probably a floor, certainly not what I would be happy with. But then I hardly ever get what I want from this company.
In any case the nit costs that affected profitability so much this quarter should have less of an effect in q3. We'll see.
It does look like EMachines and Hp both underestimated demand.
So far all AMD has been able to do is threaten INTC with its technology in a conceptual way. It sure would be nice to see that concept expanded into a real world, actual sales kind of way.
Even with only fab30 on 90nm AMD has the potential to put the fear of god into INTC and provide a preview of what fab36 will mean. I'm hoping that getting from here to there involves something less than a leap of faith.
I really want to see some reviews of production 90nm chips.
Thanks for the post, it was very informative. It looks like I need to spend more time in the 10q archives also. Just when you think you know everything that is going on, POW! That $19m recovery looms especially large. It kind of makes the last couple of quarter’s look weaker than I thought.
I'm still bullish on the rest of the year but a little more contrite. AMD needs to get itself away from Break Even where these niggling expenses can cause all sorts of mischief.
I was sort of assuming that Hector was trying to manipulate earnings in a conservative way to project steady EPS improvement. I'm not so sure now, looks more like they’ve been scrambling to keep from falling back into the loss column.
Well I don't know any more than you do, it just makes sense to me that AMD would be less than enthusiastic about shrinking the k7 when it is soon be EOLed.