Slightly OT:AMD blows past earnings estimates

[Viditor]

Business Week

Sorry if it's OT...but I know some here are interested.

 

[Markfw]

Good They need it quick before Intel can strike back. They barely got their head above water, and conroe does look like a threat. Now in the server arena, I see no change for quite some time.

 

[TuxDave]

Originally posted by: Markfw900
Good They need it quick before Intel can strike back. They barely got their head above water, and conroe does look like a threat. Now in the server arena, I see no change for quite some time.

Good for another reason too. I need Intel to miss estimates so I can get a better deal on Intel stock. I'm so selfish.

 

[Hard Ball]

Originally posted by: TuxDave

Originally posted by: Markfw900
Good They need it quick before Intel can strike back. They barely got their head above water, and conroe does look like a threat. Now in the server arena, I see no change for quite some time.

Good for another reason too. I need Intel to miss estimates so I can get a better deal on Intel stock. I'm so selfish.

I'm thinking about picking some Intel shares up soon too,

And will definitely dump all of it before new year (coming of K8L)

Hehe, I guess being a geek, and being part of boards like this sometimes does pay.

 

[Viditor]

Just keep some things in mind everyone...

1. As Mark points out, Intel won't be a challenge at all this year in the server space. Even if Woodcrest is mind-blowing, it won't finish being qualified until next year sometime for servers. Even then, it isn't competitive in Enterprise because of HT (and we have yet to see what K8L and quad core Optys will bring).

2. In the mobile space, most here are rampant Yonah fans...however, AMD has had a HUGE growth in mobile (from low single digits to almost 20% in a year is mind-blowing!). With DC Turions coming out in a month or two, I don't expect this to dwindle...in fact it will probably grow some more until Merom platforms are well established (and then we shall have to see).

3. Most importantly, remember that Conroe has been pushed forward in the schedule several times. While Intel deserves props for this, keep in mind that it's most likely that volume will be low for most of this year. Remember too that the second half is the period of highest volume requirements, which means that Conroe chips will most likely be quite scarce for most of this year (relatively speaking). If you recall, Prescott had this problem as well...Dell had to replace their Prescott systems with Northwood chips because they couldn't get enough supply for the quarter following the launch.

4. Last but CERTAINLY not least, if any of the rumours about Intel dumping their Netburst inventory on the market on the very cheap are true, we are going to see a plummet of both AMD and Intel stock rather quickly. If it happens, I think this will hurt Intel more than AMD because it won't effect the Opty sales at all, but it will kill Intel's operating margin. It may also send a signal to analysts that Intel has no good follow-up to Conroe (the very LAST thing it's stock needs right now!).

With the above caveats, I agree that Intel (INTC) might be a good bargain later this year...I'll be keeping an eye on it's share price as well!

 

[A554SS1N]

I'm hoping by June AMD's S939 prices will get really cheap :/ With me being someone who doesn't have much money the reason why I'm hoping for it....

 

[DAPUNISHER]

Market dynamics still confuse the shat out of me! On such good news, why is AMD stock way down already this morning?

 

[Viditor]

Originally posted by: DAPUNISHER
Market dynamics still confuse the shat out of me! On such good news, why is AMD stock way down already this morning?

3 basic reasons...

1. In the conference call, AMD guided for a flat Q2...however they will have an extra week in Q2 so analysts read this as a lower guidance.
2. The old addage "buy on the rumour, sell on the news"
3. Analysts are quite scared about Intel initiating a price war. They feel Intel is near the lowest it's going to go already, but AMD isn't.

 

[zephyrprime]

And yet their stock is down. Once I bought a bunch of options anticipating a earnings blowout by AMD. They came in 250% about estimates or so but their stock still didn't budge! I lost a mint. I really think AMD stock is price manipulated. Just look at that analyst call a while ago downgrading AMD right before the stock went up. The little guy is at a huge disadvantage to the sharks on wallstreet.

 

[DAPUNISHER]

Originally posted by: Viditor

Originally posted by: DAPUNISHER
Market dynamics still confuse the shat out of me! On such good news, why is AMD stock way down already this morning?

3 basic reasons...

1. In the conference call, AMD guided for a flat Q2...however they will have an extra week in Q2 so analysts read this as a lower guidance.
2. The old addage "buy on the rumour, sell on the news"
3. Analysts are quite scared about Intel initiating a price war. They feel Intel is near the lowest it's going to go already, but AMD isn't.

Thanks. #2 makes sense to me anyways.

You pretty much nailed it

 

[DrMrLordX]

as has been noted before, the prices on Intel's upcoming Conroe-based processors seem pretty damn low considering how well they will supposedly perform. That will undermine their entire line of Presler and Prescott-based CPUs. Merom will probably drive Yonah prices down as well.

AMD will have to drop prices to compete. Price war price war!

 

[Griswold]

Originally posted by: DrMrLordX

AMD will have to drop prices to compete. Price war price war!

I think AMD is in a better than ever position to wage a price war with the massive increase of production capacity that can be expected throughout this year. Lets not forget, it wouldnt be the first time AMD is battling Intel by means of price. And they dont even have to do it in the server segment, which is where the fattest margins are.

 

[DrMrLordX]

Maybe, maybe not. Keep in mind that Intel has a considerable advantage in process technology. They're getting more cores per wafer than AMD, and by the time AMD gets a 65nm process going, Intel will be well on its way to 45nm (or possibly there already).

Yield issues are also relevant, but one could rightly assume that process advances alone may give Intel a huge advantage in an upcoming price war. That plus Intel's cash reserves spells trouble. I'm sure AMD can go low with their prices, but we won't see earning results such as those mentioned by the OP should AMD follow such a course.

On the flip side, if Intel does engage in a price war, remaining stocks of existing Intel processors will be rendered nearly worthless, and it will be difficult for Intel to re-establish higher CPU prices later if/when the price war ends.

 

[v8envy]

Originally posted by: DrMrLordX

On the flip side, if Intel does engage in a price war, remaining stocks of existing Intel processors will be rendered nearly worthless, and it will be difficult for Intel to re-establish higher CPU prices later if/when the price war ends.

Depends on HOW the price war ends. Assuming there is a price war (big assumption. It's a lot more profitable to advertise and partner your way into mind share than to compete on price on a product most end users aren't buying retail), it could go on until AMD is positioned as a niche player. Then, once Intel is the only game in town for desktop/mobile CPUs, they can name their margin.

Remember that Intel has Dell and Apple in their pocket. Which gives them both high volume+low margin and low volume+high margin. All AMD has is HPaq, a manufacturer who would be just as happy to sell Intels if they could do so at a lower price.

My prediction: no price war, at least not on the enthusiast parts. Sweetheart deals for OEMs are about as good as it'll get.

 

[Viditor]

Originally posted by: DrMrLordX
Maybe, maybe not. Keep in mind that Intel has a considerable advantage in process technology. They're getting more cores per wafer than AMD, and by the time AMD gets a 65nm process going, Intel will be well on its way to 45nm (or possibly there already).

Yield issues are also relevant, but one could rightly assume that process advances alone may give Intel a huge advantage in an upcoming price war. That plus Intel's cash reserves spells trouble. I'm sure AMD can go low with their prices, but we won't see earning results such as those mentioned by the OP should AMD follow such a course.

On the flip side, if Intel does engage in a price war, remaining stocks of existing Intel processors will be rendered nearly worthless, and it will be difficult for Intel to re-establish higher CPU prices later if/when the price war ends.

Some good thoughts, but let me make some corrections if I may...

1. Your thought on yield issues are a bit understated...remember that Intel is at the beginning of a ramp of a whole new architecture and a relatively new node, and they are launching almost as soon as they can (relatively very little time for tweaking the process).
That's why very few people are expecting much volume for Conroe/Merom until the end of Q4/beginning of Q1.

2. Existing CPUs (Netburst) are where Intel can afford to cut like crazy and where the price wars are expected...for example, the 960 is expected to drop to $316 in Q3, and the 950 to $241 (from it's current $637).

3. While there is a lot of press on Intel's 45nm SRAM, they aren't due to ship 45nm CPUs until 2008. AMD has also produced a 45nm SRAM on their new process (though it was three months after Intel), but there is some discussion that AMD will change horses mid-stream and go to metalized gate technology at 45nm...this should let them get to 32nm very quickly and reduce the leakage at 45nm quite a bit as well, though it will probably delay 45nm chips until mid-2008.

 

[DrMrLordX]

Yeah, I'm wondering about AMD's 45nm process as well. I had forgotten about AMD's 45nm SRAM but I read that a few days ago.

So Intel's 45nm products won't ship until '08 huh? Hmm, interesting.

And yes, I imagine that Intel will slash the hell out of prices on their 9xx and 6xx Pentium lines. Yonah prices will also crash once Merom is shipping.

 

[Griswold]

Originally posted by: DrMrLordX
Maybe, maybe not. Keep in mind that Intel has a considerable advantage in process technology. They're getting more cores per wafer than AMD, and by the time AMD gets a 65nm process going, Intel will be well on its way to 45nm (or possibly there already).

I wouldnt count on 45nm before the end of 2007. All intel showed last january was working 45nm SRAM cells, AMD did the same recently (according to Tweakers.net in dutch) - and from there it usually takes 18-24 months until massproduction of CPU Dies, at least that was how it worked in the past for Intel. Of course Intel will be out with 45nm sooner, but the AMD/IBM cooperation has yieleded better shrinks in the past (think of 90nm). We'll have to wait and see how well 65nm SiGe works out for AMD.

Originally posted by: v8envy
Remember that Intel has Dell and Apple in their pocket. Which gives them both high volume+low margin and low volume+high margin. All AMD has is HPaq, a manufacturer who would be just as happy to sell Intels if they could do so at a lower price.

Thats not quite true. AMD currently supplies the third largest PC manufacturer in China (Tsinghua Tongfang). And is also present in Fujitsu-Siemens amongst other smaller companies. But the most important thing is: They supply the top server manufacturers - except Dell. But Dell is nowhere near as big as IBM, HP and Sun combined.

AMD shifted their priorities to servers and mobile parts long ago, high time some people realize that.

 

[DAPUNISHER]

Originally posted by: Griswold
AMD shifted their priorities to servers and mobile parts long ago, high time some people realize that.

:thumbsup:

 

[Viditor]

Originally posted by: Griswold

AMD currently supplies the third largest PC manufacturer in China (Tsinghua Tongfang). And is also present in Fujitsu-Siemens amongst other smaller companies. But the most important thing is: They supply the top server manufacturers - except Dell. But Dell is nowhere near as big as IBM, HP and Sun combined.

AMD shifted their priorities to servers and mobile parts long ago, high time some people realize that.

Well said Griswold. AMD is indeed represented by everyone except Mac and Dell.
There is a common misconception that Dell is everything in computer sales today, but it's far from the truth...Dell's sales are dwarfed by the combined sales of IBM and HP, and even one on one they are no match for either in server revenue. IIRC, Dell sold fewer than 10 servers over $50k last year.