AMD: Goodbye Mr. Chips (AMD)(INTC)
AMD is like every stock. There are two schools of thought about the No. 2 maker of X86 processors for PCs and servers. Arguing that things could not get worse for AMD has its advantages. The stock hit $41 in early March and fell to $17 in July. Since that, it has had a modest bounce to $25.
AMD is picking up share from Intel. In the PC market its share has risen to 27% in the second quarter from 18% a year ago. And, thanks to relatively new deals with companies like Dell, those numbers could improve. But, Intel’s new core dual chips have allowed it to at least pull even with AMD in chip performance, and Intel is cutting 10,000 jobs, which is likely to improve margins. And, Intel is saying that it has already shipped five million of its dual-core processors in the first 60 days they were available
According to Reuters, Citigroup analyst Glen Yeung said he expected AMD to gain more share in 2007, thanks in part to a new supply agreement with the No. 1 PC maker Dell Inc. But, at what cost?
The Inquirer of London would argue that AMD is selling chips to Dell on “razor thin” margins. To make matters worse, to deliver this volume of chips, AMD may have to cut allocations to smaller, higher margin customers.
If the Inquirer’s theory is accurate, AMD is in for a hard 2007.
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies that he writes about.
AMD is picking up share from Intel. In the PC market its share has risen to 27% in the second quarter from 18% a year ago. And, thanks to relatively new deals with companies like Dell, those numbers could improve. But, Intel’s new core dual chips have allowed it to at least pull even with AMD in chip performance, and Intel is cutting 10,000 jobs, which is likely to improve margins. And, Intel is saying that it has already shipped five million of its dual-core processors in the first 60 days they were available
According to Reuters, Citigroup analyst Glen Yeung said he expected AMD to gain more share in 2007, thanks in part to a new supply agreement with the No. 1 PC maker Dell Inc. But, at what cost?
The Inquirer of London would argue that AMD is selling chips to Dell on “razor thin” margins. To make matters worse, to deliver this volume of chips, AMD may have to cut allocations to smaller, higher margin customers.
If the Inquirer’s theory is accurate, AMD is in for a hard 2007.
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies that he writes about.
posted by douglas mcintyre at 5:41 AM
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