Calls of Note Part 4

- ThinkEquity believes Dell Computer (NASDAQ:DELL) will use AMD (NYSE:AMD) processors for up to 20% of its PCs, increasing AMD revenues by $500m in CY07. Firm expects the announcements to come during DELL's September 12 analyst meeting, with boxes ready to be shipped. They are confident that this will occur and as such, we are adding this to their estimates. Additionally, they think AMD is winning share versus Intel on performance (not price) and seeing stable ASPs. Major OEMs (including and beyond IBM) are slated to increase AMD's share, particularly in servers.

* Based on these sizeable share gains, the synergies and strategic importance of ATI, and the extremely low valuation, the firm strongly recommends that investors buy AMD shares at these levels. Firm notes that if they could upgrade AMD higher than BUY, they would.

* Believes AMD will begin supplying MPUs for DELL PCs. Firm's sources in the supply chain have indicated that DELL will use AMD processors for shipments in 4Q06 and CY07. This could represent substantial upside to AMD's revenues they believe it could increase revenues in CY07 by $500 million. When ATI begins taking meaningful share from NVDA in this business (2H07), revenues could increase even further.

* Firm believes the announcements could come at DELL's analyst meeting. They believe the announcement of AMD processors for desktops will come during DELL's September 12 analyst meeting, with boxes ready to be shipped. Thinks DELL AMD notebooks will be shipped in 1QCY07.

* Firm notes they are so confident of this new DELL business that they are raising estimates:
Rev: 3QCY06 remains at $1,335.0 million; CY06 from $5,353.5 million to $5,453.5 million; CY07 from $5,800 million to $6,200 million. EPS: 3QCY06 remains at $0.35; CY06 from $1.45 to $1.49; CY07 from $1.75 to $2.00.

Rating remains BUY. Raising price target from $27 to $30.

* Firm notes they are now significantly above the Street consensus:

Revs: 3QCY06 at $1,305.0 million; CY06 at $5,281.4 million; CY07 at $5,877 million. EPS: 3QCY06 at $0.23; CY06 at $1.11; CY07 at $1.29.

Notablecalls: Think this is an actionable call. Analyst sure has conviction & conviction is what I like coming from an analyst.