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"Intel changes microprocessor "roadmap" and delays some new Itanium chips."
Me...
I wonder what the delay is about. It can't be heat, power, or dumbness issues as none of those kept INTC from releasing Paxville. Maybe it's because Paxville is proving such a hit that INTC doesn't want to slow sales down with comparisons to Montecito. Yeah, that's got to be it Montecito in its' current configuration is just too good.
Opteron had better be looking out that rear view mirror cause Itanium is catching up fast.
You're right. I think managing the quarter to within two days and then saying, $100M got out of our control says a lot about what Intel knows about their market...
Me...
Which brings up an interesting point. If INTC is so good at predicting demand just how did they allow the chipset fiasco to happen? Clearly INTC is in reaction mode, just trying desperately to keep things from completely unraveling. What are you going to say if the channel stuffing grows by another $100M in q4?
Yeah, I know, just wait until the new products are out.
bobs, of course it all depends on end market demand. AMD´s scheduled price cuts suggest that they don´t see any shortages for those parts for the rest of the year...
Me...
Well, there are at least two kinds of opportunity cost. There's the one the consumer is familiar with in which they can't get the processor they want from BB, or the mom and pop store can't get what they want through the channel. Then there's the more pernicious kind in which "might have beens" never get done. For AMD the "might have beens" are a much bigger factor than any temporary shortages since they impinge on long term relationships and product development. I've wondered more than once just how much of the reluctance by HP to expand the AMD relationship, in light of the rather obvious benefits, was due to the capacity issues.
Anyway, as I said these sorts of questions are best answered in hindsight. One can only wonder what the situation would have been if fab36 had come online a year ago, or even 6 months ago. Even at 90nm and 300mm the landscape would have undoubtedly been a lot different today. Lots of woulda, coulda, shouldas.
but I currently can’t see how they are not running into the capacity wall over the next months (late Q4/Q1). And who knows when really significant volumes from Fab36 will be shipped into the market.
Me...
I tend to agree, even with AMD's improved process capabilities I don't see how AMD can avoid near-term shortages.
The trouble is that we won't know for sure just how much AMD has been hurt by not having enough capacity until about this time next year. If at that time AMD is doing around 15 M processors a quarter (25% market share) then it will be pretty obvious that AMD could now be selling a lot more than what's available.
No OEM is going to commit to a new product or line unless AMD can guarantee product. While this doesn't show up in places like BB or the distributors it is still a very real loss of business non-the-less.
I would really like to know how much new business AMD has lost because it couldn't guarantee product and how much expansion of product lines didn't occur for the same reasons.
Anyway, you can't worry about what might have been. Things still look very good and should get better for some time.
With Chartered coming online in H206 AMD should be able to flood the market. Whether they will want to is another matter. Given the difference in market shares and ASP's it probably comes down to how much Hector wants to gain market share and how INTC's new products are doing. Any weakness in INTC's line will probably be taken advantage of.
It's going to be really interesting seeing how many bells go off at INTC when/if AMD takes over 20% market share. It's hard to see INTC giving up much market share without a fight given the way the company is structured.
If AMD takes 25% overall market share INTC has very big problems, at 30% it's a disaster that forces BOD action. Right now I don't see a way that this can work out without some blood being spilled.
Headline; “INTC invents tuner”.
Well maybe not yet, but by this time next year I'm sure a lot of people will think so as the INTC revisionist spinners do their thing. When I first heard that INTC was buying tuner technology I thought "My god they've gone and resurrected LCOS". But on further thought this probably has to do with platformization and INTC's moves into the Media Center markets.
One thing's for sure; if this Media Center stuff takes off it will rejuvenate the PC business like nothing else. Anything less than a dual core Opteron seems inadequate for the purpose, even with chips doing the codex work. This especially true if you want to record one program while watching another. This is probably why INTC is getting ready to rewrite the history of tuners. These things are going to be a big part of the Media Center PCs and having control ala Centrino and WiFi/WiMAX is a no brainer.
I've been talking, off and on, about the "PC in a closet" for at least 7 years now. The Media Center is about as close to that idea as anyone has come yet. As to whether it will prove out or turn into a product whose time has come and gone seems kind of undecided lately.
There are a lot of cheaper alternatives out there that will allow you to do TV time shifting(TIVO, cable/stelite boxes) and that doesn't include people like Google/Yahoo, that may end up offering the service for free.
Right now a dearth of software seems to be hindering a move to a PC based Media Center solution. While MCE05 is a notable improvement over previous releases, it's still pretty much a work in progress. For one it still denies cable/satellite HD reception although it does support ATSC. Also, MSFT in its' infinite wisdom has chosen a proprietary format for music storage that no one else can access (sounds like something INTC would have thought of?). Then there's the delay problems in switching from ME to using the PC as a regular computer.
Not exactly something I'd be too interested in right now, but unfortunately MCE05 is heads and shoulders above anything else out there.
Still, I remain convinced that sooner or later a computer is going to be at the heart of every home, handling everything the "PC in a closet" was supposed to and probably a lot more. Evidently INTC thinks so too.
Chipguy,WBMW, this Poxx is for you.
http://www.theregister.co.uk/2005/10/20/intel_pax_bench/
HP's one note tune.
http://www.theinquirer.net/?article=27069
The arguments don't make any sense to me unless they include the one fact that makes a difference. Intel manufactures 90% of the available market. Given two companies in a duopoly with one at 90%, there is NO WAY that the two companies could wind up with competitive processes for their marketplace that would allow them to swap places (sorry for sounding so pragmatic). Intel heads for volume and AMD tries to out-perform. You know, on that basis, AMD hasn't done too well, have they?
Whereas, AMD could never manufacture nearly the volume of Intel (and I mean 20% is tops), Intel does not have the capability to tweak out what they have to match AMD (although they compete very well).
Let's give credit where credit is due. There's a lot of talk of "what AMD can do", but Intel has shown that it's already there. There's a lot of difference between laying the bet on the table, and talking about the bet you'll make.
Me...
Does anyone have a clue as to what that rant is about? Smoothe, How do you get two beemers into a double wide?
me: No, I'm not bored, I'm stupified. You certainly are one great investor, bobs. Maybe you should be running a multi-billion Wall Street hedge fund... Sometimes people are so misdirected...
Me...
Perhaps you would like to share some of your successes? The last time I checked this was still called Investors Hub. Come on let's not be shy I'm sure you have a few pearls of wisdom to share with the board other than don't buy AMD.
So the peak of 2000 wasn't a good selling point for you? Seems like quite a swing to endure when you're watching your shares go from a high of 48 to a low of 3.
Me..
Yes it was a very painful period. The 10 in bobs10 was the number of stocks I held about that time, all techs. I got out of virtually everything else, but held onto AMD way too long. I never said I don't make mistakes.
Anyway, I really underestimated the fall AMD would take. Still I continued to like AMD so what I ended up doing was selling and buying back lower a number of times. The end result of which was about a doubling of the number of shares I held at a much lower price.
All during the 90's when techs got into their frequent down drafts the stocks usually rallied about 30% within a couple of months of reaching bottom. The problem was I never thought techs would take 90% losses before seeing bottom. Prior to the slaughter a 60% drop was more normal.
Well, to make things even worse I finally got cold feet about $6 and sold everything and in doing so totally missed the bottom. That was the one thing I didn't want to do based on the bagger principle, another major mistake. What I ended up doing was buying back in about where I sold, $6, and ended up with about 4 times the number of shares I had pre split at a much lower price. I then added more shares between $6 and $10.
As you can see I have a very high tolerance to risk. And yes we're not talking a small number of shares either. Certainly not what your typical investor would do. On the other hand lots of people bought above $35 split adjusted and sold much lower. From my point of view you have to have a game plan and the balls to follow it through. I know it might seem like recklessness to many, but it seems to work for me. That doesn't mean you can't change tactics with changes in the environment.
To give you another example. During the y2k run up I bought about 10k shares of a company named Harmonic at about $8. It eventually went to $150 and I ended up selling the last at around $70. The game plan was completely different than AMD but it worked very well. The company never made any money and was just a pure technology play, but boy did it bounce around.
Normally I'm about 75% long and 25% short term. Up until this year that is. This year I've done very little trading and almost none in AMD as I fully expected the price appreciation we've seen. Part of the problem in estimating what my AMD basis is has to do with the 25% I used to trade on a short-term basis.
I certainly hope this hasn't bored everyone to tears, I promise this will be my last post on the subject, for awhile.
I'm just wondering when you think AMD is going to become a "sell" to you. It doesn't sound like you even have a stop loss in mind, which any reasonable investor should have, especially one who is sitting on a five-bagger.
Me...
I bet you would agree, but I've also noticed that I do things quite differently from most investors. Not that such a mythical being is easily categorized. Me, I'm basically a home run hitter, no singles here. It's a strategy I've honed through over 50 years of stock trading.
Anyway, it's not so much a price as a situation that determines when I buy/sell.
When I started buying AMD, from my view, it had a number of problems that needed to be taken care of. Among those was getting a competitive design. They had gone through the k5 fiasco and come out with the k6. It looked pretty good, but needed a better fpu. The real news was the k7 and fab30, which seemed to hold a lot of promise. Since then AMD has progressed to the point where it completely dominates the X86 design high ground in everything but laptops. So AMD has more than fulfilled my expectations in that regard.
Another problem AMD had at the time was a terrible manufacturing process system. AMD had more problems getting chips through the factory than anything else. INTC was heads and shoulders ahead of AMD, but APM and the deal with IBM, along with AMD gathering more experience led to dramatic improvements. Today, at the least AMD and INTC seem to be neck and neck in the process end of things. So AMD has completed another of my check-offs.
Another area AMD was deficient in was capacity. AMD still desperately needs more capacity and market share to be taken seriously by the OEMs and the financial markets. Next year that roadblock should be removed. Of course having the capacity doesn't automatically guarantee it will be used, but given the almost continual drumbeat of new and expanding relationships it seems likely that the capacity will find a home. Still this check-off item remains unresolved.
Another area AMD had immense problems in was marketing. AMD had one product, a desktop consumer PC. I somewhat naively believed that if AMD fleshed out its line-up things would naturally fall in place. Looking back my biggest mistake was underestimating the stranglehold INTC had on the market. Today AMD is competitive in all X86 processor areas and the suit seems to have opened up some markets that were previously closed. So while I can't check this item off I'm pleased with the progress.
The final item was financial. Back when I started investing in AMD it was like a rerun of the Perils of Pauline on a daily basis. A couple of times AMD got so squeezed for cash that it was questionable whether the company would survive. Today while certainly not the moneymaker INTC is, it's doing much better. So this item remains in limbo with a hope that this q will be the one that sees AMD finally achieve financial independence from INTC's shenanigans.
Originally I thought that it would take about 5 years to achieve the above tasks. It's been 7 years now and there are still things to do. But as long as AMD continues to make progress I'll hang in there. So you see for me the time to sell will be when either AMD stops making progress or completes all the tasks and then starts to backslide. I have no idea when either of those things might happen.
Right now the thought of selling doesn't even cross my mind. Things like stop losses can be expensive as big Beta AMD routinely takes big jogs up and down. I don't want to find myself in a position where I'm chasing AMD on one of its' breakaways. In fact this is the time I've been waiting for all these 7 years. To me it still looks like the big pay off is yet to come. As far as I'm concerned all AMD has to do is resolve a few more items on my check-off list.
The capacity, marketing and as a consequence financial items look like they will be resolved in 06. The one thing bothering me is the likelihood of a price war next year as lots of new capacity comes online at both AMD and INTC.
I'm sure this wasn't the answer you wanted, but perhaps someone else may find value in it. As I said I know I'm different.
Perhaps one day you can reveal to us what your selling price is.
Me...
I really don't have a selling price. I started buying AMD because the conditions surrounding the company such as the Athlon and fab30 and AMD being basically the only other player in a monopoly market seemed to indicate a lot of room for growth. Still, a very risky proposition given AMD's rather precarious financials at the time.
Since then I've held because AMD has made steady progress towards meeting the criteria for success I set up. At some point things will start to change just as they did at INTC. Hopefully, I'll be able to recognize that point before the heard does or maybe I'll be dead before it happens who knows.
Anyway, the thing is you have to have solid guideposts to measure performance against, at least I do. It's when things don't happen the way you expect that you have to make those buy/sell decisions.
Ok enough of this personal finance stuff. mmoy is right, no one is interested and it's getting off subject.
BTW, short-term treasuries are not all that unattractive these days.
ME...
And it looks like they will get a lot more attractive, but It's not my type of investment. Not a bad place to temporarily park funds your not using though, but I would stay away from longer dated securities. 2 years out is probably as far as you want to go. If anyone has variable rate debt that would probably be a good thing to be paying off as the Fed now seems intent on continuing to raise rates for some time.
One of the nice things about AMD as an investment is that about 85% of its' business is done outside the U.S. The places where it is selling most of its' products are the places with the highest growth rates and the least computers.
All the design wins of the last couple of years will continue to show up as new sales so even in a slow down in the U.S. AMD will probably do ok. Overseas, the real functionality gains of PCs, not to mention the "cool" factor of having a laptop will continue to drive sales. I suspect PCs are ranked about 3rd on the "cool/must have" chart next to cell phones and music devices.
So, while I expect a turn down in the U.S. economy I don't think AMD will be hurt that much. It might even be a standout performer in the coming drop. Now if Europe/JP gets involved in any down turn then things start to look a lot iffier.
Second, Bobs claimed to have invested in AMD when they were worth $3 split-adjusted. The last time AMD was worth under $10 pre-split was in August, 1992. Yeah, the rate of return would be pretty nice if it were purchased at this price, but the return per year would be pretty poor if you compared that vs. buying at $15 fairly recently.
Me...
As usual you've got things completly screwed up. What I said was that my buyin price was somewhere between $4 and $6 split adjusted. And no that doesn't mean I bought between $8 and $12, it's more complicated than that. Further I said that was an estimate because I've made too many trades and for most of my accounts keeping an accurate basis isn't necessary. Only you would interpret that to mean I bought at $3. Unlike you I claim no devine invervention.
So yes, as best I can figure it, without doing a lot of work, I have between a 4 and 6 bagger with my AMD investment. Last I checked that was a lot better than I would have done if I'd stayed with INTC, but CDs have probably done better than INTC during that period .
Sounds like gradeschool mentality. A "10 bagger" must sound so much better than a "2 bagger" to you, right? Almost FIVE times better? But in reality the profit you take home after buying in at $3 and selling at $30 is less than twice what it would be if you bought at $15. And how many years has it been since AMD was at $3?
This can be your first *real* lesson in investing, chump.
Me...
I think I now see why your invested in INTC. Good luck.
If you believe that, then you should buy more. MUCH more.
Me...
Too late I did my buying when AMD was, split adjusted, somewhere in the $4 to $6 range. I say that because I've made too many trades to know exactly what my buyin price is without a lot of work. Tax free accounts and such.
Here's you first lesson in good investing. It's better to buy a stock that goes to $30 at $3 rather than $15. Hint, it's the difference between a 10 bagger and a 2 bagger.
I'd be happy to include more helpful hints if you would like?
I'm not the one who has openly admitted to being the non-tech^H^H^H^H non-investment type.
Me...
I'll match my investment record against yours anytime. That is one thing I'm very good at and have been for a very long time. And I'm not just talking about AMD. You know I used to be an INTC investor and before that I was an IBM investor and Xerox investor etc. etc, and I'm not just talking tech stocks either.
While I'm sure most of the information given on these boards is done for the best of reasons, besides the contradictions that often occur, there's those nasty biases that get in the way of whatever truth it is we're looking for.
You know of course they used to burn witches, but then that was ok since it was for their own good. It is funny the way those that talk to god think that it's their god given duty to proselytize the non-believers. In such situations facts are irrelevant, faith is what is needed. The surprising thing is the number of areas outside of religion that this applies, politics being the worst. Don't worry your somewhere in the top ten.
Frankly I'm simply amazed at the breadth of your knowledge. Perhaps you could enlighten us as to how you became such an expert on AMD's APM while working at INTC?
Oh, I forgot you talk to god and he takes notes.
Anyone notice the way the wind seems to blow harder when AMD is doing well? I wonder why that is?
Short term speculation, that's all. Nothing is going to change until Intel starts delivering on their promises, anyway. I'm not expecting a turn-around from Intel this year, so you might want to sit tight before attempting to prove me wrong.
Me...
Frankly, as an INTC investor I would think you would be more opened minded to what the market is saying.
I would think that a person who has admitted in the past that they are non-technical would at least be open minded in a so-called technical discussion.
Me...
If there is one thing I've learned in life it's that the more complex the task the harder it is for anyone person to see the whole picture. Yet you continue to pontificate about everything that has anything remotely to do with processors and their production.
I know you think you have the ear of god and all you're doing is writing his commandments in stone, but until I see a burning bush I thik I'll continue to take what you say with a very big bag of salt.
Honestly, there aren't angels in your keyboard, though I suspect you really think so.
It's really refreshing getting another INTC view of things. Our primary source is smelling like year old Limburger cheese.
As I've said I'll leave it to the technical types to fight it out, but just from a seat of the pants view AMD must be doing something right given the large apparent increases in supply of processors we've seen lately. While a lot of that has undoubtedly been due to 90nm it looks to be something more than just that. AMD was stuck at about 7m chips for the longest period of time, and now it looks like they are at about 10+m per quarter. That's a big increase without any increase in fab space. Yeah, I know AMD was supposed to get a 50% increase from 90 nm, but that's after a few tweaks/times through the fab.
Since sales are always a quarter behind production starts q4 should see even more production as what ever it is that's causing the big increases in supply gets full implemented. If AMD gets through q4 without any major bottlenecks I'll be truly amazed.
I don't expect AMD to give us any hard processor numbers, but I'll bet we can get pretty close to the actual numbers after the CC. I can hardly wait.
For every successful trade on the market, there is an unsuccessful one. If you buy low, it means that someone sold theirs for a low price. If you sell high, it means that someone bought the shares at a high price. That's ok in a market that's growing, but in a flat to down market, these unsuccessful traders sometimes lose their shirts. I'm confident that there are enough bad traders out there to always find good buys, even when the common perception is different.
Me...
INTC -$.05, AMD +$.46.
Yep, there must be a lot of idots out there buying those AMD shares and selling those INTC ones. How are those AMD shorts doing?
If you look at wafer throughput, most large 200mm fabs can output between 6-7k wafers per week, but if you look at even the largest 300mm fabs right now, they are topping out around 4-5k wafers per week (16-20k per month). Overall, that probably makes die throughput of a 300mm fab more like 50% greater than 200mm, as opposed to the >2x used in your assumptions.
Me...
I assume your talking INTC fabs, which seems to support my empirical views that AMD is getting much better yields than INTC.
In terms of products, there will be mobile chipsets on the low power 65nm process.
me...
It's kind of unsual for INTC to be using its' top fabs for chipsets isn't it? When you say low-power chipsets are you talking Merom chipsets or the ultra-low power processors that INTC has said they will be coming out with next year? Why do these chipsets need to be produced in INTC's fastest fabs, or is it a capacity utilization thing?
you...
I suspect of the four 65nm factories about 1.5 of them will be used for lower power "other" stuff and about 2.5 of them for CPU's.
Me...
Any idea what the WSPW for the CPU fabs might be? When you say "lower power other stuff" are we talking hand held pda/PC embedded stuff that INTC has been talking about, or is this the communication/wiFi/WMax stuff, or something else that needs to be on 65nm?
I'm sure your quite familiar with where each of those fabs is, but but my understanding is Oregon first(D1C?), then Arizona(F11X?), then Ireland(F24?) and finally Israel(?)?
Any idea what INTC has in mind for flash?
Nice post, lots of good information.
Also, keep in mind that CPU die sizes will be about the same at 65nm as 90nm due to the shift to dual core.
Me...
Good point.
I know INTC seems totally committed to DC, but I remain somewhat skeptical about the value for consumers. This is based mostly on the lack of multi threaded programs and the sense that computers have grown so powerful that price is becoming the dominant check-off. The DC problems seem to be similar to the problems 64b adoption has gone through. Both are logical upgrades, but both are waiting on software to catch up to hardware. Both DC and 64b promise immediate processing improvement for different reasons, but seem more suited for users that really tax their machines. In the laptop area DC seems like a liability. We'll have to see how well the chips (Meron) and the ultra-low power chips INTC has said will appear at 65 nm handle heat and power demands.
As far as SOI goes, I thought I read that INTC didn't see much use for it until the 45nm level. What your saying is that at 45 nm and below INTC thinks it has no value.
Perhaps for INTC's processes they're correct, but something seems to be working for AMD.
Well like I've said I'm not technical and although I can understand this stuff at a certain level, I make no claims to really understanding it. I'll leave that to the more technical people on the boards. In the end though I basically have to wait for reviews from Anandtech and such to get a clear picture of how well the chips perform.
So I'm still a little confused as to what you think INTC will be filling up all the new fabs with. Granted DC will take some of the space but not that much and fabs don't get better with age. Is it going to be wireless stuff? That seems most likely, but INTC has been fighting TI for years in that market and as yet doesn't have a toe-hold. Or is it Wi-Fi/Wi-Max that INTC intends to dominate with its' platform strategy, or something else?
Nice figures, very useful.
This is the sort of information that should warm the cockles of all AMD investor's hearts.
I've seen Best Buy weekly flyers in places like Las Vegas and Seattle that were identical to the ones found in the L.A. Times. So while I'm sure there are some regional differences in product offerings across the U.S., the figures can probably be taken as fairly representative of the U.S. as a whole. This is especially true since the chains listed are pretty much universally represented across America.
If I calculate the data correctly the AMD share of product offerings has gone from 49% in Dec 04 to 65% in September 05.
Although the figures vary a lot on a month to month basis overall they tell a tale of continuous growth, something entirely consistent with what I would have expected. Nice to see another confirmation. It will be nice when there is enough data to do y/y comparisons.
One thing that does seem a little worrisome is the lack of progress the Turions have made. This probably has a lot to do with INTCs targeting that market.
Again, to reiterate a point from WBMW, Intel is supplying about 85% of the CPU market with 3 full factories (one of which is a smaller development factory) while AMD is supplying the remaining 15% with one full factory. The math I would do on that would say Intel is getting quite a bit more out of each factory than AMD is. Also, note that Intel builds a few things besides CPU's in those three factories...
Me...
Well since each fab is 300MM and that means more than double the dies per wafer what INTC really has is 6+ equivalent 90 nm 200mm fabs in comparison to AMD's 1. Like what else does INTC build in those fabs?, flash? Actually, it's probably closer to 18% market share, but we'll have to wait for the exact figures.
Well if INTC has such a great process producing tons of huge chips with nary an error what's INTC planning to do with 4, 65nm plants which will give INTC in effect 12+ processor fabs compared to fab30? Maybe INTC is expecting a big uptick in demand for Itaniums? Not! Maybe LCOS chips? No wait INTC cancelled that. Maybe it's going to be those cell phone chips that they have been giving away? Nope not that either.
Frankly, I'm at a loss trying to figure out exactly what INTC is going to do with all that capacity. As an insider perhaps you could clue me in.
In terms of SOI claims, do you even know what Intel has said on the subject? Regarding DSL, do you really know the difference between AMD and Intel strained silicon processing?
Me...
In everything I've read INTC has said that there is no value in SOI until 45nm. I suspect if INTC opts to go with it at that level they will have a number of problems including patents and experience to overcome. Yes DSL stands for Dual Stess Linear which is a very different process from the stretching INTC does. I've read reports that claim about a 24%speed boost due to it.
http://informationweek.com/story/showArticle.jhtml?articleID=55301424
So take you holier than though attitude and shove it.
You still don't fully appreciate the world's preference for Intel chips. The Intel brand carries a $50B equity through the last couple decades of some of the industries best marketing and promotions. Centrino practically became a success overnight due to Intel's marketing brilliance, while AMD can barely market a free burger to a hungry transient. That's why Intel chips sell better than AMD, and currently why AMD isn't feeling as much demand pressure. This is the concerning the broad market, by the way, such as desktops where Intel's solution is hardly perceived as inferior by the vast majority of the world. AMD is simply selling what the market will bear at current pricing, maximizing ASPs, rather than volumes.
Me...
Living in the past again. How many worlds do you guys inhabit anyway? In case you haven't been noticing there seems to be a race to ASP parity going on. But don't let the interfere with your delusions. I will admit that INTC did a pretty good job of brain-washing the world with unlimited advertising budgets, but lately the world has been getting a message of another kind(word of mouth) from people that know what really is what.
You call it a red flag when demand exceeds supply?? I'd call it a good chance of beating expectations. So far, INTC has exceeded their revenue guidance for the past 3 years. It's no longer a surprise to analysts, either. In fact, they expect it.
Me...
It's not such a hot thing when INTC can't meet demand because their yelds aren't up to AMD's. But AMD appreciates the extra busines it's something INTC will be getting more use to next year.
Good investors tend to look for stocks that get beaten down by investors, even though the fundamentals and future prospects look great. Chumps tend to hold onto stocks that come from companies who create products that are adored by Internet enthusiasts, even though the fundamentals suck and the future looks bleak.
Yeah, it's tough telling a diamond from a Cubic Zirconia. Strange how some gems lose their luster as they age. Stranger still is the way the true brillance of a diamond in the ruff can be brought out by a skilled hand. Of course a diamond in the wrong hands can also be shattered by a cutter ignoring the faults in the stone. Diamonds are forever, but not INTC.
Oh I see. No wonder you are so bullish on AMD. Since you've boiled it down so easily, I'll do the same. During the same time period, I see AMD suffering from inferior designs, an inferior process, and a huge overcapacity problem. They will try to drag Intel into a pricewar, but it will be theirs to lose.
Me...
Yes, the likelihood of a price war and its results are what I'm primarily interested in. Both companies are going to have a lot of extra capacity on their hands that's going to have to go somewhere.
You've already stated your belief that INTC is soon going to catch up to AMD in the design area. And you have mentioned more than once that you think INTC has solved the design problems that lead to the process problems. Further you seem to believe that all the INTC minions will remain DELL-like loyal no matter what happens.
Frankly, I find it touchingly naive to expect that one of the three assumptions will prove correct let alone all three. But then you guys have your own world you live in so anything is possible.
The way I look at it INTC feels threatened like never before. Further, the way INTC seems to look at AMD is as a usurper worthy only of INTC's contempt. Kind of like AMD is stealing nickles from the tooth fairy. As a result, like this discussion, there is probably little common ground that would interest either party. In fact one might say that AMD has been preparing for this fight ever since the Athlon and fab30 were conceived.
Back in the Athlon days I remember an article in the Inquirer, (I think) that talked about a red light Barrett had in his office that glowed anytime AMD got over 20% market share. It was as a direct consequence of that experience that INTC enacted the dirty tricks AMD is suing them for today. That loss of market share girded INTC like no other event so there is no way that INTC is going to let it happen again if they can do anything about it.
Obviously, given the relative market shares and similar cost structures INTC would have the most to lose in a price war, but because of its' superior fiscal condition INTC has the resources to stand a lot of pain. The trouble is that AMD and INTC don't have similar cost/profit structures.
Traditionally AMD has charged less for its' products and made less profit while INTC has charged more and made more profit. This sort of arrangement suited INTC just fine and AMD had little say in the matter as long as it was a one trick pony. However, starting a couple of years ago AMD turned things upside down first in the server/workstation areas and lately in the laptop area. I won’t get into the reasons AMD was able to pull off such a coup, but suffice it to say that the result was a leveling of the profit field.
So what we're seeing today is a rush to ASP parity largely because of the inability of INTC to fix the problems WBMW seems to think INTC will soon resolve. This at a time when INTC and AMD are soon to be looking for new outlets for their soon to be excess capacity.
According to IN-Stat INTC's cost per chip averages $40.
http://www.networkworld.com/news/2005/091405-intel-chips.html
While I have no figures pro or con to dispute that amount I assume AMD's 90nm costs are similar. Given the 300mm advantage INTC has had at 90nm one would have to conclude that AMD will be at least as competitive at 65 nm. This is especially true if INTC fails to deliver on the agenda WBMW is so sure INTC has fixed.
So the way I see it AMD goes into the fight in the best shape of its' career, with the best products and ASPs it could only dream about a few years ago. I still remember Jerry getting tears in his eyes as he wistfully talked about $100 ASPs. INTC on the other hand goes into the fight of its life with a paunch and a wheeze that confirm serious health problems.
INTC may take the first few rounds but the fight is 15 rounds and by the end of the 6th INTC should be totally out of gas and getting pummeled severely.
To summarize:
INTC will not fix all the problems that have lead to the current situation in time for the fight. INTC's ASPs will continue to fall as AMD's rise(AMD will continue to expand its' presence in the high profit markets while INTC continues to lose share in those markets). AMD will continue to extend its' relationships with the OEMs and channel suppliers. AMD will take more and more market share.
Is there some other metric or data you can point to that indicates AMD has a better production process than INTC?
Me...
As everyone should know by now I'm not technical so basically something has to hit me over the head for me to pay attention to it. As such I basically rely on empirical judgements to guide me. When I look at the number of fabs INTC has and try to reconcile that with the shortages (yes I know INTC says chipsets are produced on older processes) INTC is claiming I can only come to the conclusion that something isn't right with INTC's production processes. Besides the shortages in chipsets I seem to remember Andy saying in the MidQ that INTC was running at full capacity and had less inventory than they wanted. Again, another red flag.
On the other side of things it seems pretty apparent that since the "E" stepping AMD has enjoyed much better bin splits and yields. I'm saying this primarily because of the lack of supply problems. Again, I am aware of the latest Asian supply problems, but since no one else is having these problems they're probably localized. From my point of view AMD is having much less of a problem supplying markets than I had expected. And no it's not because of a lack of demand. This at a time when INTC is having admitted supply problems which should be adding increased pressure onto AMD's ability to supply.
Given the design wins AMD has garnered and the large increases in server sales, without a big improvement in AMD's production processes(other than just 90nm) I see no way AMD could be performing like it is. And this doesn't take into consideration the additional demands Turions have been placing on production, nor does it explain why AMD hasn't been forced to pare back Sempron sales given the restructured priority picture.
All in all I've concluded that SOI and DSL are worth a lot more than INTC claims. Further, I now suspect that since the "E" stepping changes the bin splits have improved to the point where AMD chips are so far ahead of the "sweet spot" that AMD is able to sell virtually every chip it produces.
The way I look at it AMD now has production processes in place that allow it to raise the "sweet spot" at will which should keep AMD ahead of INTC at least until 65nm chips start to appear. But given INTC's past history of problems with 90nm that's far from a given.
There is a limit to how many chips AMD can produce even with the improved process methods, and I expect we'll start to hear more about that as we get further into q4. Right now I'm thinking AMD probably produced about 10 to 10.5 million chips in q3, pretty close to absolute max production of about 11.5m chips which they should hit in q4.
So you see that while I don't have the technical background I do have a method behind my madness. I'll leave the technical stuff to you guys.
The real problem I have with the technical stuff is that it's been my experience that it's too easy to wrap up problems in the mumbo jumbo and obfuscate the obvious. I've found that, as a rule, I'm much better off using my eyes and my two bits of gray matter when it comes to figuring out what is really going on.
Some people like risk stocks, and others like stable stocks. I invest a small amount in risky stocks from time to time, but the majority of my trades are with large caps. I miss some opportunity, but for the past several years I've gotten good returns. Hey, if you think you can time AMD's rise and fall, then by all means go for it. They are on the rise now, so why not?
Me...
I bet you just love CDs. To me there is no riskier investment than a CD given inflation risks and taxes, but then that's just me. Personally, I prefer home runs. They're a lot more work, but the rewards are more than enough to compensate.
Next to CDs the thing I hate most is a stock that goes nowhere, or worse loses money. I put a great deal of effort in making/supervising my stock picks and I want to be rewarded handsomely for my efforts. Slackers are not tolerated.
Based on AMD's share price close of $91.24 on July 20, 2000 and their average share volume in the 2nd quarter of 154,558 shares, that would mean that AMD had a market cap of $14.1B in 2000, not $3B. If you want to do a post split calculation, you can base it on their share price close of $37.50 on September 1, 2000 with average recorded volume in the 3rd quarter of 311,943 shares, when they were still valued at $11.7B. Interesting how investors are already valuing AMD close to the heights they were at during the peak of the bubble.
me...
Here, let me make it simple for you:
http://finance.yahoo.com/q/bc?t=2y&s=AMD&l=on&z=m&q=l&c=intc
http://finance.yahoo.com/q/bc?s=AMD&t=5y&l=on&z=m&q=l&c=intc
As I've said I don't care what INTC earns I care what I earn and that is solely determined by what someone is willing to pay me for my shares of stock.
LOL, no doubt when you catch the flipside of the great AMD
valuation roller coaster round trip you will cry out in anguish
for federal probes into Intel, computer OEMs, electronics
retailers etc since obviously AMD was so good and infallible
it couldn't possibly be beaten in any fair competition.
Me...
You've been spending way too much time listening to Elmer and his drivel about AMD always returning to its' mean. All I know is that others and I have made a ton of money riding the AMD roller coaster. From that point of view I say let's do it again. With what I've learned I should be able to do even better the next time around.
Unfortunately things hardly ever repeat so it is highly unlikely that I will get that chance of a lifetime again. Not that I haven't done as well with some other stocks over the years, but that's not really germane to this board.
One thing that is relevant is that it's much more profitable to buy a stock at $3 that goes to $30 than to buy the same stock at $15. Of course that requires a little perspicacity and the guts to follow your convictions, but that's what makes the difference between stock losers and winners.
AMD has gotten alot of good press recently, but when analysts start predicting a 2 bagger within 2 years I can't help but wonder if we're getting pretty close to topping out. It will be interesting to see if Q3 earning throw a "cold shower" on the party or if the runup has been justified
ME...
I hear you. Sizzle will only take AMD so far, eventually it has to cut pig. Personally I think AMD is going to report very good earnings. As to whether those earningw will be enough for Mr. market remains to be seen. In any case unless the momentum guys move AMD well past reasonable pricing I'll probably hold and hope for the best.
All the wbmw's, all the chipguy's, don't amout to a pisshole in the snowbank.
Me...
Agreed. These guys have biases bigger than their brains.
Re: The way I see it in 06 is that AMD continues the HP model with more and more INTC only clients slowly adding AMD product lines. Even Dell eventually is going to be forced to face the music.
And what makes 2006 different from 2000, 2001, 2002, 2003, 2004, and 2005, and all the other years when you or another 'Droid was predicting this? Is AMD going to continue to lead with a huge gap in performance? I think not. A much lower power part? Not after Woodcrest launches. A much lower price system? Well, that I can believe, but it's never helped AMD in the past....
ME...
I thought you read these boards? Clearly you must have been in some other dimension to have missed the nearly constant stream of design and relationship wins AMD has been garnering over the last couple of years.
It's only logical to expect the OEMs to go where the money is. Right now Itanium is a flop, and Xeon is getting its' butt kicked in every comparison, not to mention gaming and workstations where INTC doesn't even make a creditable appearance. INTC's chips are hot, draw too much power, compare miserably to AMD offerings and worse of all those facts are getting out to the OEMs and ultimate consumers.
What were going to see is more of the same with the OEMs continuing to flesh out their AMD product lines as AMD retains/expands its' competitive advantages. Add to this the effect on OEMs the suit is having in reducing the INTC shakles and things look pretty good.
The small players in the distribution channels can add AMD to their product list fairly easily, but the bigger players take time to develop products and lines. More and more of those efforts are going to start showing up next year.