Advanced Micro Devices Inc (AMD)

[bobs10]

CC view

Well, It's pretty obvious that the dual hobgoblins of "Price War" and "NGA" are going to be haunting AMD for the rest of the year. This view is supported by the rather tepid forecast of q2 given by hector and the boys. Still this prediction needs to be taken in the context of "under promise and over deliver".

It was a pretty good quarter despite the light revenues which can be explained by a couple of things. First as I remember it ASPs went up 7% which means given the lower revenue that AMD must have sold less but higher priced items. This in turn seems to go along with the server price cuts Dirk said were done to stimulate sales. So it looks like AMD probably gained $share, but not necessarily unit share in q1. I would guess that INTC was hell bent on getting rid of low-end inventory and AMD decided rather than fight, just to get out of the way? Another thing supporting this view was the increase in margins. I liked that the boys view this change as permanent.

One other thing supporting the higher margin view in the future is the impact that 300mm will have on q2 and again the effect 65nm will have on H206. These things alone should be enough to steadily grow margins unless INTC goes off the deep end in some sort of kamikaze way.

Over all I was very impressed by the tone and demeanor of the guys in the CC. Nice to see how Derk is coming along with his presentation skills. Anyone that heard him a few years ago can tell he feels much more at ease in these situations now.