Advanced Micro Devices Inc (AMD)

[bobs10]

AMD production driver

One of the things that came out of the CC was the rather emphatic response to questions suggesting that the 58.5% GM was no fluke and could be expected as a standard going forward. I also seem to remember Hector saying that AMD would be working towards a GM of about 60% recently. What I took away from that comment was that above the desired GM AMD would start reducing prices rather than increase profitability.

Meeting this GM goal may well turn out to be the driver for increases in production/capacity. If AMD concentrates too much on the low-end it's going to be difficult to maintain that percentage, without some offsetting high-end contributions. Since the outlook for gains in the business side of things seems to be dismal, in the short term, I wonder just where those offsetting gains might be coming from?

Of course AMD is going to be experiencing some big drops in costs as 300mm and 65nm kick in, but if NGA is going to be taking high-end market share something seems not to add up.

I don't know, but this seems to be just another data point indicating that AMD has plans we're not aware of. Sales and product contribution information should be interesting reading going forward.

Another thing that seemed interesting was the continued percentage drop of international sales in the mix. Perhaps this has had more to do with INTC dumping into those markets?