AMD Bears Continue To Emerge

And you thought Bank of America’s Sumit Dhanda was bearish on Advanced Micro Devices (AMD)…wait until you get a look at today’s call from Hans Mosesmann, an analyst at Nollenberger Capital Partners.

Mosesemann picked up coverage today of both Intel (INTC) and AMD. For Intel, he set a Buy rating and a $27 price target; for AMD he set a Sell rating and a $13 price target.

The two calls are obviously related; and just as obviously, his AMD view is the one that some people are not going to like. “AMD appears to have rested too long on its laurels in 2006 and is now in our opinion quite vulnerable in 2007 in terms of [microprocessor and graphics processor] market share as well as ASP declines.” Mosesmann contends that the Athlon64/Opteron architecture “is now aging,” while Intel’s Core2 Duo products “have unambiguous performance/price/power advantages in 95% of all PC applications vs. Athlo64/Opteron.” He says that AMD’s “late transition” to 65 nm in 2007 “does not resolve AMD’s dilemma.”

Mosesmann also says that AMD’s plans to add 33%-plus capacity adds risk to the story, as does the addition of the multiple business lines from ATI.

Not least, Mosesmann says that AMD’s prediction that it can grow at twice the expcected 10% growth of the microprocessor market in 2007 “is incredibly bold…it strikes us that there is no upside to this statement, just downside.” He also says that the company’s belief that it can maintain market share in graphics processors is “perhaps an even more aggressive statement by AMD given ATI’s recent woes.”

As for Intel, Mosesman says its new products, process technology acceleration and reorganization “has set the stage for the company to regain pre-eminence in the x86 market…we suspect AMD underestimates the giant that has been dormant in recent years.” And he adds that the purchase of ATI by AMD “will price ill-fated and a net positive for Intel in the medium term.”

Mosesmann says he expects Intel to gain modest overall market share in 2007, driven by the mainstream and high-end PC segments and servers. “At current levels INTC shares are the ’safest’ they have been in years, in our opinion. With the Vista launch and strong product lineup, we believe gross margins are set to increase starting in early 2007.

AMD shares today closed 15 cents lower to $21.97.

AMD 1-yr chart:

Comments

[Tech:]

This point of view of Hans Mosesman is overexagerated.
why:
I. at 13$ it does not even represent the "value" of the company
II. AMD is not resting on their Laurels and continuously improve their products, the last improvements came at the beginning of december with lower power and higher performance products. And more improvements are planned for 2007and onward.
III. the AMD Athlon64/Opteron is not "aging" and is a lot less older than the Intel "Pentium" and is also continuously improving (power, security, performance
IV. "unambiguous performance/price/powe... advantages in 95% of all PC applications"
I doubt it. Where are those informatios coming from? Intel is certainly a lot better than previous Intel. it may have some marginal temporary advantages on specific benchmarks against AMD processors.
V. AMD adds capacity according to their main customer plans, HP, SUN, IBM/LENOVO, 3 main chinese manufacturers, ... and DELL and a lot more! Those customers needs AMD to control their price and are not willing nor have interest to reduce AMD MS (to the contrary they would certainly like to bring it to the 25-30% instead of 20-25!)
VI. Vista will finally take full advantage of All 64 bit AMD processors (Intel still manufactures and sells a lot of 32bits only!)
and VISTA will require powerful Graphics that ATI can provide
VII. ATI does well in many markets, as an example, at this time of the year Xbox 360 is selling particularly well with an ATI chip in it!
VIII. Competition will be tougher, but AMD has what it takes to fight.
IX AMD is concentrated on one goal, improve processors and Gain market Share listening to their customers.
X. Intel Even if they have sold many activities, has still to support some dead end products like Itanium ;o)

2006 Dec 20 08:57 AM

[Eric D:]

I do NOT think that it is overexagerated.

I. Today's value has NOTHING to do with a future target value. I beleive that the $13 target value for AMD is quite reasonable and likely. AMD had shown desparation with frivolous lawsuits to try and make a quick buck instead of focusing on output. Much of that lawsuit was thrown out (in I am not mistaken) and likely the whole thing will be thrown out.

II. AMD is in fact resting, just as Intel was. The table has turned and I am affraid AMD bit off more than they can chew when they acquired ATI. This is going to spread them thin and lower their ability to deliver.

III. The Athlon64 processor is aging just as the Pentium processor is aged. Why do you think Intel changed product line names to "Core Duo / Core 2 Due, etc??"

IV. Look it up... Intel Core 2 Duo systems are beating the closest contenters of AMD in every benchmark. The Quads are going to really put AMD way back in the dust. I have yet to find a review site that has put ANY AMD processor in the lead over Core 2 Duo.

V. Customers change orders at the drop of a hat. A couple of those and AMD is in for a lot of pain. The price break on an AMD processor is not significant today.

VI. Intel doesnt ONLY offer 32 bit. They have plenty of 64 bit options. 32 bit is actually a lesser available option in the Intel line currently. Powerful graphics are not just attainable by ATI. nVidia is just as good if you ask me. ATI is likely to decline in performance / value / availability now that AMD owns them.

VII. Yes, ATI was historically improving. I wouldn't bet on those improvements to continue at the same pace. I would instead bet that we will see performance declines now that AMD owns them.

VIII. As much as I am not impressed with AMD, I would definately still like to see them in the picture. Competition is good all the way around. It keeps everyone on their toes - and it keeps prices down. So as long as AMD is still around, I can buy a better processor from Intel at a decent price.

IX. I think you need more than one goal to succeed. I think you know that too, since you stated "one goal" but listed more that one. I think Intel has that and more covered.

X. Itanium in its beginning was not just an Intel product. I am not sure where it is today, but it is not a large market and there is NO AMD counterpart. If you want to compare apples to apples, stick with the consumer chips.

XI. Speaking of Apples, if AMD was so great, why didnt Apple chose THEM for their processors? If memory serves me, Apple recently decided to put Intel Inside of the Apple machines. So Intel has the PC and the Apple market.

2007 Jan 04 08:25 PM

[Tech:]

Nothing new makes me feel that it is not exagerated.
I. 13$ is unreasonable AND unlikely, No, AMD is not counting on Lawsuits and AMD is not desparate and No again Those lawsuits were not Frivolous .and have even be reinforced recently So many companies have been forced, everywhere in the world to stop buying AMD products if they wanted to get Intel processors and this will be proved as prohibited monopolistic practices. AMD has shown a very good "output" expansion in quantity and quality.
II. AMD is not resting, they have always something new in the pipe but it is true that Intel was so late for so many products that they came alltogether in 2006 . To the Contrary, ATI integration will prove to provide more synergies and sooner
III. the Athlon 64 was so advanced that it took 2 generations of cores and the 65nm process to Intel to only catch up !!!
and the core duo was (is) 32 bits! need the Core2 duo (with AMD established and recognized standard 64 bit instructions set !) to compete.
this involved so many different motherboards that integrators were (are) lost!
IV. Untrue, only some (not all) core2duo in 65nm have some better benchmark than AMD chips in 90nm !
none of Intel 90nm was better than AMD 90nm better chips!
AMD start shipping 65nm processors next week ;o) implies better performances to come pretty soon ;o)
V. AMD is selling now to the major players, ATI customer base will certainly serve to compensate some possible leaves. hopefully, May not be as big as the Dell leave from Intel!
VI. I did not said Intel was ONLY offering 32 bits, I just said that Intel was still selling a majority of "32 bits only" (opposed to 64 bits) (look to your next store and you'll still see old Celerons or even pentiums ! and core duos, not core2duos). ATI will benefit from AMD works on 45, 32 and 22nm for the future , I am not sure that Nvidia as such roadmaps already?
VII. Just see above
VIII. WE at least agree that competition is good for all of us (but fair competition) I could give you story of the 286 era where Intel gave deliberatly wrong masks sets to AMD to produce a second source. this was before they decided unilateraly not to provide 386 masks and when it took too many years (4-5!) to a retired judge to arbitrate and finally give rigths to AMD successively to the 386 and to the 486.
IX When I say one goal, it means processors (and graphics) and there are many to come not only one;o)
X. I am not comparing Itanium since I consider it as a dead end and a money distroyer for Intel. Even HP the co-inventor does not believe in it!
XI. AMD has worked with apple in the past, (e.g. combo SCSI Ethernet PCI chip) I am sure the links are not broken, It has taken a few years to Dell to understand what they could get from AMD it may take less to Apple to do the same ;o)

NEW:
XII. drawing size 90nm, 65nm, 45nm is not all.
Architecture is also important, AMD memory controller is a better solution than Intel Front side bus . Hypertransport 3 will bring even more bandwith for data exchanges
AMD is also using SOI which means lower power.and will use immersion lithography and ultra low K dielectric which are giving each 15% improvements in performance.
without talking about the fusion program to integrate "other types of coprocessors"
XIII. Microsoft software is finally released with 64 bit capabilities . A customer could take advantage of it on an AMD turion64 (X2) not on a celeron or core duo !

2007 Jan 05 07:40 PM

[Eric D:]

I guess it is time for some real facts!

I. Unless you are a stock analyst, I wouldn't consider you an authority on whether $13 is reasonable as a future target. I beleive it is, but then again, that is speculation on my part. YES, the most recent lawsuit was very rediculous and unsubstantiated. I read it... and YES, much of it was dismissed. Read here: news.zdnet.co.uk/itman...

II. Yes bud, they are resting. And I don't think they will do ATI any justice. I only bought one ATI product after they were starting to re-emerge as a dominant force. After the AMD purchase announcement, I will no longer consider them.

III. 64 bit was around for Intel since Pentium 4 prescott. Core 2 Duo is ALL 64 bit. There is no 32 bit only flavor for Core 2 Duo. I don't know where you get your facts, but check the specs. The specs don't lie.

IV. Name one AMD chip that beats a Core 2 Duo. As of July 14th, Tom's Hardware (who has almost religiously favored AMD) ran an article titled: "Gane Over? Core 2 Duo Knocks Out Athlon 64" www.tomshardware.com/2.../
There are plenty of other references and benchmarks from toms hardware as well as annandtech. I would get tired siting test after test.

V. So what. They have already been doing that. And Dell never left Intel. You can still buy Intel based Dells.

VI. I already commented on this.

VII. Yeah... you too.

VIII. Intel made AMD who they are. Should they keep doing that? Don't you think it's about time for AMD to stand on their own?

IX. Ok

X. Itanium is still alive in a new flavor... not one I care about though.

XI. So.

XII. So.

XIII. Not true at all!! Microsoft has had 64 bit available for quite some time. And I am currently running Vista 64 on a Core 2 Duo.

2007 Jan 07 04:09 AM

[Tech:]

Yeah exactly, real and updated facts:
Ist it seems that you give comments based on more than 3 month (or more) old information versus
this updated one:

SUNNYVALE, Calif. -- December 28, 2006 --AMD (NYSE: AMD) today announced a significant legal victory in its ongoing antitrust suit against Intel Corporation. In an order effective yesterday, the Federal District Court in Delaware overruled Intel’s objections and ordered it to produce documents and other evidence bearing upon Intel’s exclusionary conduct outside of U.S. borders.

II. this is just your opinion, and not Facts.
A. AMD ATI Synergies:
AMD announced an increase in its expectations of cost saving following the ATI merger, to $150 million in 2007 and $220 million in 2008. Originally, AMD has forecast savings of $75 million in 2007 and $125 million in 2008, according to Jefferies & Co. equity analyst John Lau, who attended the meeting

B/ another Award fesh from this week (Any Intel Award?)!

SUNNYVALE, Calif. -- January 9, 2007 --The National Academy of Television Arts and Sciences has awarded a Technical and Engineering Emmy® Award to AMD (NYSE: AMD) for its industry-leading ATI Radeon™ 9700 technology. This award for Pioneering Work in Near and Real-Time fully programmable Shading via Modern Graphics Processors will be formally announced during an award ceremony at the Consumer Electronics Show (CES) on January 8, 2007, in Las Vegas.

III. Verify your source, it is worldwide known that Intel has used AMD 64 bit instructions and not the other way round ! Tto give you some information, When AMD disclosed their 64 bit instruction set, Intel added some specific microcode to their Pentium (but nobody could ude it , it was only for Intel Internal tests) just In case AMD would be successful ! since AMD solution became a standard, Inel then decided to make it useable on thei chips!

IV. What I said is that in some benchmarks the test were so marginally better that there is no need to mention it. The latest tests are even comparing products that you can hardly find in stores and done on Platforms who can use chips from both companies meaning mainly Intel oriented Platforms. AMD is working on an open initiative with major peripheral vendors :
"AMD 'Better by Design' Program Enables PC Manufacturers to Deliver Ultimate Solutions for Windows Vista(TM)" and everybody knows that Graphics from Nvidia and ATi are far superior to Intel Graphics and that Atheros or Broadcom Wireless are also Far superior to Intel Wireless.
customers will choose!
V. I agree, they have not left Intel, just given AMD a 20% MS, but Dell being with HP the world major player make your own deduction ;o)
VI. you add nothing to oppose on this one
VII. see award on point II. above and more to come!
VIII. no, AMD has mad Intel who they are. There were a lot of far better processors, when IBM decided to go with an Intel Based board and came to AMD to ask to second source them.
the 286 with the PC AT became a worldwide standard and was the inflexion point where Intel became monopolistic then with the 386. So yes, AMD made Intel what they are bringing credibility with a second source in front of a Mot 68K and then PPC which were recognized at the time a lot better architected.

XI. you may see APPLE look sooner to AMD than Dell did!

XII. I'll give you a "formula 1" example . you may have an excellent motor, but if you dont have good aerodynamics nor suspensions nor brakes, nor good pilot, then you loose the race !
It was also to show you that AMD was able to fight Intel products with One drawing technology difference.

XIII. read carefully what I write, I mention Core Duo and CORE 2 Duo
Yes hopefully you can run Vista64 on a Core2duo but all the customer who bought CoreDuo (notice the 2 is not written there) will not benefit of the 64 bit capabilities has they could with a turion64 and the turion64X2! Linux folks, were able to work on 64 bit standard machine from AMD a long long time ago.

All what I say is right and well informed, I wouldn't say the same for what you are assuming more driven by feelings, wishes or Intel PR.

2007 Jan 11 11:43 AM

[Eric D:]

No need for me to comment further on ignorance. Looks like the article is correct. AMD is in the 14s now. I think that $13 target is very realistic over the next month or two.

2007 Feb 13 01:24 PM

[Tech:]

Eric, I must admit that the stock exchange is able to do strange things, and you were right concerning the shares price predictions ;o(

but I can not admit that you consider me as an ignorant, all what I said was true story .

I'd rather like to see AMD technical excellence backed by strong financial help to really show what they could be up to .

2007 Jul 30 05:41 AM