INTC vs AMD

INTC vs AMD

Some existing data from yahoo.com:

AMD:
Profitability
Profit Margin (ttm): 6.17%
Operating Margin (ttm): 9.27%

Balance Sheet
Total Cash (mrq): 2.63B
Total Cash Per Share (mrq): 5.438
Total Debt (mrq): 658.28M

INTC:
Profitability
Profit Margin (ttm): 20.46%
Operating Margin (ttm): 28.48%

Balance Sheet
Total Cash (mrq): 9.12B
Total Cash Per Share (mrq): 1.568
Total Debt (mrq): 2.26B

1) Let's see. General price cut is 30%, AMD has to follow about the same percentage. Where are they going?
INTC:
Operating Margin (ttm): ~20%
AMD:
Operating Margin (ttm): ~6.5%

Then for AMD Profit Margin (ttm): 6.17% when 9.27%, where should it be now?
~6.5% - (9.27% - 6.17%) = ~3.5%

2) last time when AMD did the secondary offering, it had $1B in debt and about $1.5B in cash. If AMD still needs to grow (it must!), how can it do?

This is a general analysis.
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INTC Operating Margin is 3 times of AMD

28.48% vs 9.27%

If a 30% cut doesn't work as expected by INTC, it will do another round.

How can AMD survive?
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對INTC & AMD想提醒一點

AMD cap $13B
INTC cash $9B (賬麵上)

market share: 85% vs 15%

差距實在太大。
價格戰是最有效的方法。
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我做股票大多是TA，做FA並follow的隻有有限的幾個，其中包括INTC & AMD。

長線看INTC在18個月內會回到$25.理由包括FA還有GM目前的story.
長線還加上目前的短線，不看好AMD。
AMD很可能最近幾個月還會做secondary offering.

我沒有任何INTC or AMD position.
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我覺得AMD現金流可能支撐不住了.
所以，我問你那個問題：價格戰下AMD怎樣盤活現金流？

如果果真AMD做secondary offering，消息發布大概一個多月後，看TA情況，我會long AMD.因為，主力用secondary offering shares cover shorts.利空盡後是利多。

這是我對AMD的玩法。
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“ 一是 ６４－BIT， AMD 的所有現有產品都是 ６４－BIT， 也就是 VISTA READY 的。INTC 的大多現有產品不支持 ６４位。”

這個沒錯。但64BIT現在還沒有多大市場，因為操作係統還沒有出來。

“二是 服務器CPU。 盡管INTC 把它們的新一代服務器CPU 吹上天， 可這個不一樣， 那些需要大量服務器的用戶（如 GOOGLE） 都會自己在采購前測試。”

Itanium會跟VISTA服務器版同時發布。在這點上，Itanium會有優勢，因為Itanium是舍棄了現在的老路（AMD64用的）專為服務器開發的。

既然要測試，在測試結果還沒有出來前，不能說AMD 服務器CPU是王牌。

實際上AMD唯一的優勢是在64 bit PC上，在這方麵，INTC的過渡產品沒有跟上來。但這個不是INTC的著眼點，因為PC 32 bit計算能力已經過剩。

“最後生產同樣產品， AMD的成本比INTEL的低。”
No.
INTEL的成本比的AMD低得多。這就是規模效益。要不AMD會主動開打價格戰了。

INTEL的這次價格戰可能會使AMD的兩條剛投入的新生產線在還沒有收回成本時就要被新技術淘汰。

覺得對於這次價格戰AMD怎麽盤活現金流？

具體的操作對象，比如芯片技術，隻是技術，隻是一個marketing的載體罷了。
公司的生存和發展，靠的還是marketing and then sales.

柯達彩卷在中國一直是賠錢在賣，目的就是先擊敗可憐的樂凱，然後壟斷市場。Windows賣的便宜，但所有其他Microsoft application都賣的貴，但實際上Windows才是Microsoft的靈魂。道理一樣。
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Microsoft Office revenue is bigger than Microsoft Windows revenue while units sold are much less. So relatively, Windows is cheaper.

It's true that 64bit windows server OS is the one yet to come, but this one accounts for the biggest market share.

Agree that high-end server business is more profitable. Also, high-end server business must update from time to time. While PC side, it's almost saturated and the update is very slow. Microsoft just decided not to support Win98 any more in order to force Win98 PC users to buy the latest version.
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是否覺得GROSS MARGIN高的應主動開打價格戰？
If not, we are not on the same page. This is fundamental.
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INTC ER會增加，margin降低

AMD margin降低更多，盈利會成問題。

OEM已經調整了進貨INTC/AMD比例.這表明，INTC從產品環節已經弄回了部分市場份額。但對INTC本身，利潤不會增加太多。
下一步，發貨後，OEM會根據實際用戶的反應調整進貨INTC/AMD比例。否則，OEM自己也會incur write-off.

85%->90+% doesn't mean much for INTC.

But for AMD, from 15%->10-%, it's fatal given its much lower gross profit margin. 
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Gross operating margin of INTC will go down in the next year. This is just the simple pure fact. But this doesn't necessariely mean the stock price will go lower because the revenue will be up. The revenue surge up is because the price-cutting drives old PC users to give up old ones and buy new ones. This is a big potential market that high price new product can't explore.

BTW, do you believe stock prices of INTC or MSFT have anything to do with their profit? Before you say yes, check the story of GM.

When INTC beats up AMD in the short term by this price cutting battle, it can monopoly the market again in the next 2 years when newer chips roll out. At that time, it will get higher profit margin with even newer products.

Then this game goes over and over.

What's wrong with that?

Gross operating margin of AMD will go even much lower. It may not be able to generate positive cash flow to support its expansion which it has to do. Where to get the necessary money? Is it cheap to get money from WS? Who are the real bosses of AMD? Check the major holders please. The major holders control the whole game of AMD. AMD, as a company, may lose money dearly. But the major holders of AMD are sure to make big bucks from the open market!

AMD beats INTC?
$13B cap vs $9B cash reserve?

Please think about it. This is the point I want to make.

Hope is the very enemy for hopers.