Replies to post #40009 on Advanced Micro Devices Inc (AMD)

[upc]

they did not say moderately better than seasonality. They said moderately better, period. When asked about normal seasonality they said 7-9%, and when an analyst suggested 'moderately better' implied below-seasonality, they said that interpretation was incorrect.

upc

[bobs10]

Nice work

Yes flash is doing great. The 70% incremental you calculated sounds about like what I heard yesterday. I assumed the cost reductions were due to the move to 110nm and better mix of mirror bit product though it sounds like we'll have to wait a bit longer for mirror bit to kick in. I think they said something like a double-digit increase this quarter, which should help ASPs. Another thing, I think this will be the first full quarter of 110nm production so that should also help with costs. Also costs of Mirrored bit flash are supposed to be some 15% lower than floating gate so the ramp should also help.

Processors are definitely the weak sister in the family. Ironically, these seem to have the most room for growth over the next couple of quarters. The move to 90nm should have a very noted effect on costs. Also the move to more k8s should increase the ASPs markedly. So besides the seasonal increase in units AMD should enjoy lower costs and higher prices on what it sells. One other thing as CombJelly noted, it seems that both EMachines and HPQ really underestimated demand for A64's in q2 something I doubt they will do again.

All in all I'm expecting nice boosts in Gross Margins for both flash and processors with processor cost reductions more dependent on how fast the 90nm conversion goes. I would say the $.19 is probably a floor, certainly not what I would be happy with. But then I hardly ever get what I want from this company.

In any case the nit costs that affected profitability so much this quarter should have less of an effect in q3. We'll see.