Sanders, Hector Ruiz, Ben Annexter
Revenure record 1.207 billion increase 82% q3 99 3% increase over q2 2000
7% increase processors 17% flash increase
47% gross margin
r and d 163 million up 7million q2
142 million, 11.8 % rev
op income 262 million 5.1% increase 21.8% rev
interest income 20 mill
interest expense 17 mill
gain on sale 375 mill voice communication 37% rate of tax, 212mill gain after
9% of 11% notes retired 23 mill charge
20% tax rate on operations
409 mill net income record 1.18 share or income
219 million or 64 cents per diluted share
2 for 1 stock split
cash balance 1.22 billion dollars
cap spending 249 million up from 161 q2 more than half for Dresden
154 mill distri
417 million record?
R and d up slightly 650 for full year
Mg and h spending up for season
Interest income flat 20 mill
Interest expense flat 17 mill
Q4 tax rate of 20%
Fasl income break even
Can continue operating profits of greater than 20% greater than model of 18%
312 million shares up to 314 shares
capital spending, up to 850 million for the full year, Dresden
164 million depreciation in q4
flash sales 98% of mem group, increased 17% q2- q3 double q3 99
72 million units up 11%
average density 9 ½ half megabits up from7.2 per pack in 99
average density will continue trend
unit prices higher
demand continues to exceed supply
cell phones, auto, internet infra, set top boxes, mobile internet access
no market segment except for cell is more than 20% except cell 35%
good growth in the number of systems
demand for dix 100% growth for year
long term agreement give excellent visibility for at least next year
will be hard pressed to meet demand
100% growth for next several years, sales determined by capacity ramp
able to exceed sales plans for q3, can not do for every quarter,
q4 growth will be more modest, will exceed 2nd half projections of 10% for
45 million q2 to q3
embedded processor, network prod, platform products (chipsets) 100 million
per quarter chipsets primary variation
foundry and other services 50 million per quarter for foreseeable future
tougher market achieved record sales of 6.9 million units, gained market
athlon lead growth,
augmented by duron, unprecedented ramp
athlon and duron exceeded 3.6 million, demand remains strong
k6 demand surprising strength 3.2 million under 50 asp
in spite of weakness, duron demand strong everywhere
1.5 million units in q3 or duron, fastest ramp in history for amd
new infrastructure was needed, mobo and chipsets
challenge going slot to socket
motherboard suppliers were less aggressive on pricing
easily sold out high end, hundreds of thousands of ghz+
socketed parts almost 100% now
1.2ghz this month, faster year end
fab 30 doing most athlon production
30 is now fully functioning, all costs are included in q3 results
800mhz duron this month
work with infrastructure partners
integrated graphics tardiness limits low priced pcs
km133 shipping in volume in December
excellent execution, 7.2 million 7th gen processors this quarter q4
km133 could dampen duron sells
will sell out athlon production
motherboard for duron is limiting sales
athlons and durons will set records in units and dollars
will exceed 25 million, will be near to 28 million, up nearly 50% from 99
8-9 million units in q4, market share of 20%
flash growth ramp will be limitation
less dramatic growth in q4 demand will exceed supply beyond q1 2001
4.18 billion dollars for 2000 for flash
q and a
What was total unit count? Will asp rise?
Athlon and duron over 3.6 million, Duron 1.5 million units
Very strong demand for Athlon, Duron will increase shipments, KM133 will hurt
duron sales, will shift sales to Athlon, not as much flexibility for Duron
prices will sell limited durons
7.2 million processors for sale in q4, don't think q4 and q3 sales will be
corporate margins will stay over 20% of operating
strong demand for product, wish km133 was available, terrific quarter
December January will corporate markets come around? ½ half for corporate
market fujitsu nec in japan now do , white box guys putting pressure on tier one
guys, more than 50% would welcome amd athlon based pc for commercial lines
The ponies are coming, 1st quarter next year, better solution for corporate
Q? Capital spending for the year 2001?
Don't want to say much for 2001. Appreciation will be larger, capital
spending, still deciding.
Q? Flash pricing long term pricing? Collar on flash pricing, up or down
certain %age. Moving into 2001 seen a modest decline in prices, very comfortable
in curve pricing, price/bit going down, unit price continues to rise as density
rises per package. Lower cost per bit still get a handsome price.
Q? 50% prices lower than today in 2001 how will it impact? Little impact 85%
of business in long term contracts.
David Wu ABM
Q? PC market, what has happened in Europe? Our business in Europe looks fine
in Q3. Believes gained marketshare in Q3. 16.3% marketshare to 17.5% marketshare.
Business in Europe was good, consumer sector business was good, and they like
AMD. Slow down in the US in the low end in consumer, but AMD was not big in the
sector. Did not have duron available, sell through in Q3 missed the problems.
See the PC market as strong, over 150 million units, the death is well
overstated, high teens growth this year for PC market. 2001 market will be
terrific. Has more to do with misguided expectations of intel has caused this
problem with analysts. Seeing a normal kind of year, expect PC unit demand up
well over 10%. Looks like a regular Christmas, the grinch will not steal it.
Q? Thinks holidays unusually slow?
Does not see it slow. 43 million pc processors sold in the 4th quarter.
Weakness in the low end $399 space in the US. In Europe the customers see a
higher price for a low end pc, better time selling higher end pc due to higher
costs. Strong selling season coming up on Christmas.
Q? KM133 chipset problem. How did the problem arise?
Had seen this problem coming for a long time. The KM133 has slipped for a few
months. They have to spin the silicon one more time. The units will be available
if the opportunity is there. They have to go with the D rev of the KM133, no
product until December. Ali will also not have theirs available until Q1 of
Q? Duron pricing question. Is it likely that prices may firm?
This is a temporary issue we have to discount for platform differential.
Platform differential becomes wide due to no chipset. Will not be able to
participate in some very low end lines.
Q? What is total difference in system cost without KM133?
As much as $30-45 difference.
Q? How high can Duron speeds go?
As high as an Athlon. Increase transistor performance, goes to Dresden first,
so first into Athlon. Then goes to Duron. 900MHz by the end of the year, 1GHz
for next year.
John Joseph Salomin smith barney
Q? Capacity in Austin and Dresden?
Very pleased with Dresden progress. 2500 wafers a week by year end. On track
for 5500 a week by end of 2001. Output depends on product mix. Complete capacity
for 1st quarter of 2002. FASL plan on 100% bid growth per year. Shipped 72
million units last quarter in flash, expect to do 14 terabits next year.
Q? Will Austin go copper? Austin will be Aluminum in 2001. All Duron there.
We are evaluating taking Austin to copper. Dresden copper, Austin aluminum. End
of Q1 virtually no Athlons from Austin.
Mona /Rosetta Management Group-
Q? Concerns of flash market? Comments?
Business relates highly to attractibility of products, just not demand.
25-30% possible flash growth next year. Most desirable products keep demand when
supply and demand come into balance. Very happy with customers for flash.
Cellular business is good and some guys are better than others. More and more
bits are consumed despite slowdown in sales.
Q? Micron has moved into flash, is that any implication on you?
No. We have long term relationships, will be fine in that market. Working
closely with Micron for DDR and also working on chipsets using embedded DRAM
technology. See Micron as an ally more than a competitor.
Even with slowing cell phone growth, the number of bits per phone is going up
so rapidly that in 2001 the bit demand by the cell phone market will triple.
Q? What do you think of rambus?
We are market driven. Cost differential in rambus, putting all support behind
DDR. All customers say give us double data rate.
Q? Seen any problems with inventories?
We have not had a significant about inventory issues. E machines has a
substantial inventory problem but they are not our customer.
Q? Laptop strategy?
Greatest opportunity for revenue increase for 2000. We expect to introduce
the palomino and the morgan in the 1st quarter of next year. 266MHz high speed
bus and the powernow feature. Lower power over all than original devices. Think
we have a compelling offering for the mobile space. Suspect to do well with
these the 1st half of next year with superior value at the platform level.
Working with chipset makers to have a competitive platform.
E magness Oppenheim
Q? Thinks they should have a write up in fortune. With money in R and D is
there anything in the pipeline radically different? Buying back any shares? Top
management to sell any holdings? With sharp decline in the dow and nasdaq and
with elections might this have a bearing on your economic projections for the
next year, might this impact your business?
Expect the year 2001 to be again an excellent year for pcs, growth in high
teens, will continue to grab market share. Flash excellent growth. Good growth
in 2001 and are taking that all into account. EPS and earnings in total will
grow at least as fast as revenues grow even taking in higher tax rate. New
technology, one or two things, not introducing them now, no longer at technology
disadvantage to intel, excellent shape in going forward. Formed DSP alliance
with TI. Management selling, this is the buying opportunity of the lifetime, no
selling at 9 to 11 times earnings. Got some liquidity during the last 9 months,
that is behind us. Stock buy back, 1.2billion does not give enough comfort to
buy back in stock. When people start to differentiate in chip stocks it will be
seen as a very strong value. Still comfortable with $2.50 in earnings. Doesn't
think it will stay at that price for long.
Q? Exposure in Europe comment, revenues in Europe? How does Dresden hurt or
help in that respect. 57% in Q3 for international market, 61% last quarter.
Legarity business international was sold. Processor business and flash business
are about the same as it has been in Europe. Does Dresden help or hurt in
Europe? Does not think so. Foreign currency issues will not be significant. Take
advantage of sharing intellectual property to compete with intel.
David Wong Dean Witter
Q? Heavily back end loaded quarter. July ugly, August better, after labor day
had a very strong finish. A typical summer. Q 4 looks normal.
Q? ASPs, UMA, should we forget about $100 asp target?
MG and E good job on cost controls, defer some things in q4, some dollars
will show up in q4. R and D targets? 10-15 million more. Duron price
substantially lower than expected due to platform differential. AMD compatible
motherboards were sold for higher prices than Intel boards. Don't see that
problem lasting. Duron is clearly superior. This is temporary.
Q? Long term agreements do they involve long term payments?
Yes. These contracts have teeth. There are penalties, prepayments. They will
not be specific as to percentages of these contracts.
Analyst conference is November 9th.