Estimate Changes: Advanced Micro Devices, Inc.
(NYSE: AMD) ($15.38)
Long-Term Attractive
F2000 EPS: $2.44 from $2.49
F2001 EPS: $2.23 from $2.35 Eric Rothdeutsch, Semiconductors/Computer Hardware
"Our recent checks with motherboard manufacturers in Asia indicate that
motherboard demand continues to be weak while inventories of components, including chipsets and DRAMs, continue to build," said Rothdeutsch. "Our checks also indicate that Via's KM133 chipset -- which mates with AMD's Duron and Athlon processors -- has yet to be approved by AMD. Given that the KM133 offers integrated graphics and eliminates the need for a separate graphics card, sales of Durons into the value end of the PC market effectively should be limited. We believe that the work-around for the KM133 requires a re- layout of the PC motherboard, resulting in a time penalty that should push out the availability of Duron/KM133 motherboards into 1Q01. Given weak PC demand, no upside from KM133 motherboards, and what we believe is an imminent price cut on processors, we now believe that our previous 4Q00 expectations of 6.5 million K7 processors was overly optimistic and we are cutting our processor shipment forecast to 6 million units. We also are dropping our processor average selling price assumption from 88 to 80. We are lowering our F00 revenue and EPS estimates from 4.8 billion and 2.49 to 4.7 billion and 2.44, respectively. Our F01 estimates are going from 5.68 billion and 2.35 to 5.55 billion and 2.23, respectively. We are maintaining our Long-Term Attractive rating on AMD and lowering our 12-month price target from 30 to 27, or 12 times our new F2001 EPS estimate of 2.23, to reflect what we believe is a deteriorating environment for PC component suppliers."
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