Wednesday, November 08, 2006

Calls of Note Part 3

- Morgan Stanley notes that as they have suggested for months, Dell introduced AMD-based
OptiPlex desktop PCs for the corporate market on November 7, and these mainstream corporate PCs are configured with AMD Athlon 64 or Athlon 64 X2 dual core MPUs. Dell has continued steadily to introduce new PCs using AMD's MPUs, and the firm expects a large percentage of its needs to be supplied by AMD in the future. Since Dell is a 20% customer for Intel, the steady transition toward AMD as a second source could cause Intel to continue to lose market share and encounter overhead absorption problems. Their view of how Dell will affect MPU market share over the next one to two years is a primary factor behind their above-consensus estimate for AMD and below-consensus estimate for Intel in 2007. In addition to benefiting AMD, the OptiPlex 740 uses NVIDIA's integrated chipset solution (nForce 430 MCP).

The firm views Dell's announcement as further confirmation that the company intends to reduce its dependency on Intel, which they regard as a positive for AMD and NVDA, and a negative for INTC. In the past, AMD has had virtually no exposure to the corporate PC market, and they strongly believe that its growing relationship with Dell will help AMD gain traction in this lucrative segment of the PC market.

Notablecalls: Expect to see some buy interest but nothing drastic. The news should not come as a surprise for AMD watchers.

1 comment:

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