Here is a minimal comparison of Zeev's comments on AMD last week with those that appeared in The Trader column in Barron's over the weekend. I extracted two items which seemed to be directly comparable in their focus. There was more in both sources, and the reader is encouraged to read the sources themselves. It is rarely a good idea to accept someone else's summary of another person's work if significant decisions depend on the information. You can read Zeev's statements (marked with "z:", below) by entering "32004" in the Post box, above. You'll have to find a copy or transcript of the 10/07/02 issue of Barron's "The Trader" column by Eric J. Savitz to find their statements (marked with "t:", below).
Fred
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z: ... the critical question about AMD is survivability. ... if AMD is weakened too much, one of their partners (probably Infineon) will grab them (just as Cyrix was gr(abb)ed some four five years ago). The last thing INTC wants is for Infineon, or even the IBM semiconductors division to become their direct competitor in CPU's. That argument does not mean that the pressure on AMD will not result in its demise, so you need to examine their financial situation.
t: (Dan) Niles doesn't see AMD disappearing. At some point the company will become an appealing acquisition target. Hard to know who would buy them, though. IBM, maybe. Or a Taiwanese chipmaker like Via, which once bought Intel-clone maker Cyrix. Perhaps Micron or Samsung would like AMD's flash memory business. But with PC fundamentals continuing to erode, and a potentially soft Christmas season ahead, the stock may need to move even lower before the vultures descend.
z: I have no idea how much cash they are going to go through before they turn positive cash flow again. With their new number, they could bleed some $250 MM per quarter, at that rate they can bleed for about three quarters before they will be running very tight on cash (they have a little more than a billion in cash right now). If the technology malaise continues for another three full quarters, then indeed survivability is a question.
t: There are growing fears AMD's balance sheet isn't strong enough to withstand the rough environment. While the company had about $1.1 billion in cash and short-term investments at June 30, that cash is quickly evaporating. Tim Mahon, chip analyst at Credit Suisse First Boston, expects the company to be cash flow negative over the next six quarters -- he figures the company's cash position will go negative in next year's second quarter, necessitating new financing to fund operations.
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