Advanced Micro Devices Inc (AMD)

[bobs10]

One thing I've been wondering about is where exactly; the big increase in inventory INTC has experienced over the last year is located. In particular, how much of the increased $427M in inventories in q2 is in sitting in the warehouse and how much is in the channels. It now appears that INTC is orchestrating a fire sale (pun intended) to reduce those low-binning Prescott inventories.

It further looks like AMD's response to INTC's flood of 32 bit chips may be a flood of A64 bit chips. This could well be a good test of the markets readiness to accept the move to AMD64.

In any case the news about AMD releasing more laptop chips seems to correlate with what Hector was saying earlier in the year about H2 being big for laptops. From my seat of the pants view it does look like AMD is selling more into every strata, but volumes and ASPs are the hardest things to figure out.

As far as fixed costs go. Even with the rather large fixed cost increases AMD has been experiencing it wouldn't take that many more sales of 64bit chips to cover most of those increases.

Personally, I've been slowly moving to the position that while revenues should continue to increase nicely, increased costs will pretty much match those gains until fab36 comes online. The new AMD motto might be "it's all about fab36". In other words I don't expect the kind of explosive earnings growth AMD experienced with the Athlons. The EPS race is turning into a marathon, not a sprint.