Friday, December 01, 2006

Calls of Note Part 3

Merrill Lynch commenting Advanced Micro Devices' (NYSE:AMD) mobile plans, saying that success in the mobile processor business is critical to AMD's future. AMD still appears on track to launch a 65nm version of its existing Turion mobile part in Q2 of next year, followed by a complete redesign to be launched late in 2007. The highly integrated Fusion product looks interesting, but will need 45nm process technology and as such won't be shipping until mid-2008 at the earliest.

Firm think that AMD can take some additional market share in mobile next year, perhaps moving to 20% as compared to 17% for the most recent quarter. However, they think getting further than that will be tough, at least until 2008. AMD does not have the clear product advantages in mobile that it enjoyed in desktop and server during 2005 and early 2006. On the right track, but fully valued even given additional share gain in desktop and server next year.

AMD certainly deserves credit as a market share gainer, but firm still struggle to see how we make money on the stock for the intermediate term. Their work suggests that combined AMD/ATI earnings will be in the $0.72 range for 2007, which doesn't make the stock look compelling at $21.

Notablecalls: Not actionable but good to know category.

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