Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I would agree with you about AMD bringing up fab36 on 90nm and 300mm.
First, given all the problems with the move to 90nm it makes sense to go with a proven process especially as AMD is probably going to be in dire need of capacity by that time.
Second, I don't think there is enough time left to get the bugs out of 65nm before a go/no go decision needs to be made. If samples are going to be out by 4q05 then it would seem the decision about the process needs to be made no later than 4q04 and I doubt that the process will be sufficiently refined by that time.
Third, while AMD may need a lot of capacity by the time fab36 comes up the amount of capacity that fab36 will provide at 90nm will dwarf the need.
Fourth, most if not all, of the 65nm equipment will be backward compatible with 90nm processing. So the cost of moving to 65nm in the future should be nominal.
Fifth, it makes sense, since so much space will be available in fab36, to bring up 90nm and add equipment for 65nm testing. I realize that fishkill will be used for testing, but there is no such thing as copy exact. There are always going to be differences.
Sixth, bringing up 65nm slowly would allow the infrastructure to build slowly (mobos, chipsets etc.).
Seventh, the cost advantage of 65nm over 90 nm will probably be nonexistent, at least at first. Even if INTC were putting huge caches into its chips, that probably wouldn't be enough of a reason to leap into an unproven 65nm process.
In short, I can think of no good reason to go to 65nm directly in fab36.
It certainly would have been a lot nicer if someone had the inclination to mention that fact. I doubt that we would have taken todays bath if it was generally known. Yesterday did all the INTC damage, today's drop was due to perceived AMD weakness.
I think it has to do with that aircraft carrier again. Or more specifically not being able to shift gears that fast.
Right now AMD is producing about 7m+ chips a quarter. Of that only about 1m are k8s. I don't think production is the major hold up, rather getting the OEMs, distributors, Mobo makers, chipmakers etc. etc. all on board takes a lot of time.
Your right, from a cost perspective I'm sure AMD would love to get to all 90nm k8 production as fast as possible. Unfortunately, AMD's business plan makes it a lot more dependent on its partners than INTC is.
It's far to early to be drawing any conclusions about AMD's 90 nm conversion. As I said yesterday the push out of the schedule can be explained if AMD has decided not to convert the k7s to 90nm. In that case AMD will need the 130nm capacity until the castrated k8 Semprons can be brought to market.
We should be seeing some reviews of the 90nm chips soon. If they are binned even slightly higher than the 130nm models it will go a long way towards aleviating any doubts I have.
If we've figured out that things wern't that bad you can expect that the big boys have also. It probably depends on how much more short covering the big boys have to do. I'll bet we're back in the 14's in a week or so.
I look for even more volatility than usual going forward as the differences in opinion about AMD become more polarized. Should be a good environment to pick up a few bucks.
It just goes to show very elastic AMD's EPS are in relation to small increases in costs. That will change going forward.
After yesterdays CC I was thoroughly confused, but the conversations going on this morning have done a lot to bring things into focus.
Incidentally froget that last line in my previous message, it doesn't make any sense since MG&A is substracted after Gross margins are calculated. Brain fart.
Found it. Thanks to Sax on Yahoo.
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4687810&tid=amd&sid=4687...
Me...
The parts quoted are near the bottom of the message.
Them...
"Normal seasonality in Q3, but 64 bit positions you differently?
Historically 7-9% is our range 2nd to 3rd quarter. We have an opportunity to grow share."
"Will processor growth come in stronger than flash growth?
No, we expect both businesses having equal shots of growing 2nd to 3rd quarter.
Below seasonality?
No, we believe a good quarter.
Gross margin with better revenue moving somewhat higher?
We have opportunities for gross margin expansion in both businesses"
Me again...
It's hard to interpret exactly what that means. Given the margin expansion despite the additional marketing costs I would take it to mean that they are expecting revenues to be at the middle to high end of the historic range? Who knows with all the CYA?
Looks like we'll be passing yesterday's volume.
I think today’s selling probably has a lot to do with disappointment in AMD's earnings when matched with where the market seems to feel we are in the semi cycle.
AMD has traditionally been a boom/bust player and without a normal boom it probably looks like a bigger bust is in the near future.
This should be a good quarter in which to evaluate AMD's management. Looking back at the CC I'm still not sure what the purpose of the obfuscation was, but right now I'm willing to give Hector the benefit of the doubt. I hope this isn't a pattern we'll see in future CCs.
Niceguy has a good breakout of q1/q2 differences
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=20312535
While this explains the accounting differences it really tells us nothing. If anything it say q1 earnings were overstated as the costs that make up the difference are normal and not unusual.
In general I agree with Niceguy more than I disagree. It just goes to show how vulnerable AMD is to things not directly related to sales of processors or flash. In coming quarters as sales of processors and flash improve, the effects of these items will diminish.
I certainly hope the big increase in "Other" losses doesn't carry into the future. This is one aspect of INTC accounting best left to INTC.
There are plenty of other companies out there with great technology going nowhere. I own a few of them.
The important thing about yesterday is that there was no break down in the fundamentals. What yesterday said was that taking market share from INTC is going to take longer than most (me included) thought.
I've seen this sort of situation before, where a company comes out with progressive disruptive technology, and the usual initial effect is for the market to ignore it. I would guess this is what has happened mainly due to INTC's strong market relationships and money. At some point though the market wakes up to the new technology and embraces it.
The question is whether AMD can get a large enough of a toehold on the market before INTC has a me-too and can Embrace, Extend, and Extinguish AMD64 for IA64. To me this looks like what INTC wants to do, but frankly I don't give it too much of a chance.
If I'm right about that scenario then INTC is in a bind because it can't make AMD64 products that are too good since the comparison with Itaniums might be unfavorable.
So what AMD needs to do is to continue building better and better Opterons that broaden the TCO gap. That includes programming costs as well as a lower purchase price, maintenance costs, and electrical costs. The rest should take care of itself.
Actually, as I rember it they said 7 to 9% was the usual for q3, but then Hector chimed in with something that indicated slightly better than usual expectations. I may be wrong about that, I'll try and check.
A couple of purely financial things to think about. AMD is a pet of some big boys that have the wherewithal to move the markets. In order for them to make money they must take if from others. It's pretty obvious that these guys had better info than we had and knew more about the weak market than we did.
So the next move for these guys is to cover their remaining shorts, which will take some time, and then move the market higher again, which will also take some time. This has been the pattern since last November, and I'm sure it will continue until it doesn't work any more. The problem is that those who lost money will not be investing in AMD any time soon so the game should get tougher to play. But then again “There’s a sucker born every minute…
The way to play AMD is to do what these guys do and not fight the market. Perhaps easier said than done. Well I'm usually short term with about 15% to 20% of my portfolio. I'll probably be returning to that pattern.
The point is that this is probably not the right time to be selling. I’m betting we’ll se 16 again before we see 11. Remember AMD is in a Marathon not a sprint.
I'm not sure AMD plans to convert k7 to 90nm. Perhaps that explains the need to retain 130nm production capacity?
I don't think it's a lack of inventory. I think it was Rivet that said the inventory was mostly A64's. But since the inventory is in line with anticipated q3 needs and k8 demand is expected to grow 50% it is a little weird.
The whole CC was weird with everyone going out of their way to create confusion. I don't know what is going on, but frankly I don't know what to expect this quarter.
If the inventory is mostly A64's why the dearth of them in retail at the end of the quarter?
No banana
AMD has higher volume days than today
http://finance.yahoo.com/q/hp?s=AMD&a=02&b=21&c=2002&d=06&e=14&f=2004&g=...
Nov 25th 02 is one.
AMD broke 30m with 15 minutes left EOM
Wow 24m shares, will we make 30M? EOM
Back in the JS era there was a time when AMD reported a change in guidance. It was the 5th day into the next quarter and the guidance was up.
I don't think Hector is so inclined. I still think the mantra at AMD is "Promise less and deliver more". It looks like Hector is much more interested in a steady improvement in earnings than the boom/bust reporting AMD has done in the past. So I don't expect any widely optimistic voicings coming out of the CC. We're going to have to listen quite carefully to what is said and what is not said to determine what's going on.
It looks like we may be heading for a record trading day.
If memory serves AMD has had a few over 25m share days in the past. We could be over 30m the way things are going today.
This volume is not unusual at cusps where large differences of opinion are reflected in the number of shares traded.
One thing is certain there are going to be a huge number of winners and losers today.
Everyone got their bets placed? I like "never again" in the 5th.
Coming up for air?
Pre market seems to be firming some. Not that much volume, just little guys, so a dedicated buyer could move the AMD market a lot. Probably will see some short covering also. I certainly hope those selling have some size 18 boots to kick themselves in the ass with.
Anyway, shock and awe is probably pretty much over. Most likely scenario is wandering in the desert until earnings.
Your right, I got that wrong. Got Hp confused with IBM.
I don't think chevy is a CIO. He was probably brought in to offer technical advice and keep the sales people honest. I wonder where he's at?
He can get a little excited at times, but generally I remember reading his posts on Yahoo with interest.
Yah, there were quite a few things in the post that caught my attention. Not being a tech anymore, the implications of the models went over my head, but I thought it interesting that an HP rep would be bad mouthing INTC's FSB as being old technology to the CEO and CIO of what was obviously a very large corporation.
Also the very large numbers of units involved sounded very good. And the fact that Noconos couldn't do 64 bit except in workstations until 05 was another confirmation of things I had heard. Then there was the comment about HP not offering 4way opterons anymore. Didn't HP just start selling those? Why stop offering them since they're Xeon killers? And finally HP clearly needs to come out with a line of AMD corporate desktops and laptops.
All in all I found lots of good stuff. The biggest thing seemed to be the indication that AMD is gaining more acceptance in the corporate world.
I heard that. My worry is that if demand for INTC processors starts to slow down, for whatever reason, INTC will be under intense pressure to keep the fabs busy. I think it was Andy that mentioned something about moving production to the 12" lines and closing one of the 8" fabs if a cut in production was needed. This would probably make a lot of sense if costs were significantly lower in the 12" fabs.
It does seem reasonable to assume that since there's just the two of them they should be able to find a solution, but things often have a way of getting out of hand and when that happens you can forget reason. Realistically, I don't think AMD is going to be too much of a threat until fab36 comes online. Of course if IBM starts fabing for AMD then you have another source of production that has to be dealt with.
So far ASPs seem to be holding up but INTC definitely has an inventory problem that needs to be dealt with.
chevy used to work for AMD in fab25
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4687810&tid=amd&sid=4687...
I don't know who he is working for now.
Not necessarily, it kind of depends on what the INTC inventory mix is. Given the moves by AMD to move the sweet spot up into the 2600+ to 3000+ range and the lack of high end Prescotts, if INTC has a boatload (you know the boat that goes to China and back without unloading) of low end to mid range chips they may have to resort to dumping to get rid of them. Of course that wont be good for AMD. This might be a bad time for INTC to be dumping low-end stuff as AMD is trying to move to Sempron.
Anyway, Opterons should grow by another 50 to 60% in q3 and the A64's could be around 1m so q3 should be good even before you start talking about the new laptop chips that are coming.
As INTC said in the CC it does appear that their market is moving down ASP so maybe AMD will just get out of the way and let INTC dump? Trouble is I don't see how that fits with AMD's Sempron plans. Things could be very messy in the low-end..
Yah, tomorrow should tell the tale.
Like I said the difference between AMD today and 5 years ago is light years. Hopefully tomorrow will bring irrefutable evidence that this is the "new AMD".
I listened to the INTC CC. Pretty boring on the whole, but I got the feeling that while INTC may be producing more flash chips it's probably not the high ASP stuff. With AMD bringing on new capacity in q2 and the move to 110 nm and mirrored flash, INTC would have had to of sold a piss pot full of those 16mb flash chips to have taken market share from AMD.
Enough speculation, tomorrow we find out
It's just frustration.
I think of what kind of company AMD was when it was trading at $95 and look at the company today selling at $14 and all I want to do is puke. Talk about your golden goose. Trouble is no one can see the gold because of that black film covering the bird.
Well, tomorrow a can of Brasso is going to be applied to the old girl, maybe then the market will take notice?
Get ready for a whiplash tomorrow.
AMD has broken through the $14 area in after hour trading on low volume. The problem is the same one we've been seeing for the last week, namely, no buyers. Well all That’s going to change tomorrow. Hopefully that's when AMD's divorce from INTC becomes final.
It really is amazing the way AMD gets carried along on INTC's coattails. The other day INTC got paned and AMD went down more than INTC, today INTC doesn't meet market expectations and AMD gets the gaff again. I wonder if they’re still teaching arithmetic in school. It seems like no one can add 2 and 2 any more. Given INTC's past performance and domination of the markets why isn't anyone venturing that AMD may have had a little something to do with INTC's miss? It's hard to believe people are so unconscious, but what's new?
It's worth noting that if you don't recieve a proxy from your broker it's probably because you shares are shorted. If you want to vote your shares you have to get on the horn with your broker ASAP.
Avatar, shor selling
http://www.investopedia.com/university/shortselling/shortselling1.asp
Since you don't own the stock (you borrowed and then sold it), you must pay the lender of the stock any dividends or rights declared during the course of the loan. If the stock splits during the course of your short, you'll owe twice the number of shares at half the price.
http://www.bov.com/pdf/bov_review28-1.pdf
Another risk which should be considered by the short seller is related to the voting rights of the shares which are sold short. At times, both the owner of the securities who lent her holdings to the short seller, and the third party buyer of the securities, may want to exercise their voting rights. Usually obtaining a proxy from other shareholders who are not interested in voting is not a problem, but in strongly contested elections, the broker may have to ask the short seller to close out his position by buying shares back on the market. The risk from the point of view of the short seller is that he may be requested to unwind his position prematurely, perhaps at an unfavourable price, unless the stockbroker’s agreement specifies how to go about such a situation.
Good questions
The owner of the stock doesn't own the stock any more. The brokerage he deals with has a responsibility to cover any difference in price. The stock is fungible so there is nothing specific about the stock itself. The brokerage sold the owners stock when the short entered into the deal with the brokerage. The short is responsible for dividends. The stock is registered in the street name, but the unsuspecting real owner, whose shares were sold, retains voting rights.
At least that's the way I understand it.
What's wrong with this?
INTC gets paned and AMD is down more than INTC. Also, the worry-warts are out in full force. It's amazing the way the mood changes on the various boards with the wind. Of course, most of that wind is flatulence.
Still looking for the $.20 I've been looking for all quarter. This is "the new AMD", slow and steady earnings gains wins the race despite being in bed with a couple of Hares(U.S. Postal and FERRARI).
New PC Games
PC problems
http://story.news.yahoo.com/news?tmpl=story&cid=581&e=1&u=/nm/20040711/tc_nm/media_video...
"The reality is that the second half of 2004 should witness the largest sales of video games in any six-month period in the history of the video game industry," Cooper wrote in a report. "There is no mistaking the potential for solid sales and profits and solid business fundamentals of the video game industry right now."
"What I hope is it's going to start moving hardware again," Davison said. "There's nothing that's really been driving growth yet this year."
Me...
Guess whose going to offer the best PC gaming platforms? Sounds like more icing on the AMD cake.
PC problems
http://www.acadiananow.com/business/html/E6587055-E099-401B-82A0-3634A0C5603E.shtml
Strange that all the problems, except Verizon's, have to do with INTC parts or companies closely tied to INTC. INTC looks more and more like a flea on a hot skillet
The point is that AMD doesn't need to do anything to help DELL. AMD is going to be supply constrained here soon and needs to support those OEMs that are of the most long term benefit to it.
There's little doubt in my mind that if Dell were to buy Opterons it would go no further than that product and Mickey would be looking to switch back to all INTC as soon as possible. The DELL business model is predicated on high volume, low-prices and warehousing by INTC. AMD can't/wont/shouldn't try to compete in that model, at least until it has more capacity.
Good points. At best doing business with Dell is a mixed bag for AMD. Because DELL is a low cost supplier they will need certain price points that probably don't fit very well with Hector's philosophy of maxamixing ASPs. It's best not to forget where Jerrys philosophy of taking market share from INTC by undercutting INTC on price by 25% got AMD.
The biggest problem AMD is going to face in the near future is supplying a market focused on the superiority of AMD products. From that point of view it makes little sense to provide special incentives to DELL, especially as one would expect INTC to fight tooth and nail for that business. It's probably best if AMD sits back and lets DELL come to them.
Other than the cachet of selling to all the major OEMs there seems to be little value or need to agressively go after DELLs business. And there are certain advantages for AMD in a weakened DELL. DELL is going to remain INTC only, for all practical purposes, even if they start selling Opterons. From that point of view anything that hurts DELL hurts INTC and consequently is good for AMD. Let INTC cut prices to the bone to retain DELLs business it's not worth the bother for AMD.
I didn't realize INTC was that far along with 90nm.
INTC should have very good margins for the rest of the year, if they can sell what they make. I guess that's a marketing problem? No reason to think they wont.
Anyway, even with superior product AMD can only do a modest amount of damage to INTC with 90nm. That doesn't mean AMD won't be very profitable, just that AMD can only make so many processors and right now demand is growing about as fast or faster than AMD can add capacity. So INTC continues to do well for the next couple of years, or until demand drops off. By q3, or sooner, of next year AMD could be really hurting for product if they don't find someone to fab for them.
With the superior product AMD would love to put INTC in a squeeze, but because of limited capacity AMD ends up just hugging INTC.
Interesting idea. INTC has been able, in the past, to push product because they were INTC the innovator and because people believed everything INTC did came straight from god. At least INTC marketing told them that. Now that INTC is a follower and the halo is a bit tarnished I wonder just how willing the troops will be to follow along into the desert.
To me it looks like all the screw-ups of the last five years or so are finally coming home to roost. Even for an INTC there are limits to how many mistakes you can make before someone starts noticing. Maybe that time has finally arrived?
So we have a tarnished golden goose with a dark patina laid down quite a while ago (AMD) facing a fatted calf that has lately fallen into the pig sty and can't seem to get out (INTC). Fortunately for AMD, very few people can remember past last year, and even fewer know the histories of both companies. So I would guess INTC would have a pretty hard time convincing people to pay more for an inferior product instead of buying the superior product offered by the company that created AMD64. We could very well be looking at a cusp in AMD/INTC relations. One thing is for sure, if INTC doesn't pull a competitive 32/64 AMD64 solution out of its' hat the people with the money will have to start taking notice. Mr. Market will undoubtedly be a lot less forgiving than it has been in the past.
Amazing how this is starting to play out like a Dan Brown novel with twists and turns around every corner.