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AMD now a virtual gorilla – Sanders

Stock to split, more 64-bit Hammers to come

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While Intel's heavyweights were wooing financial analysts in New York yesterday, AMD had an alternative gig down the road, with CEO Jerry Sanders telling his shareholders what the future holds. Sanders said the outlook was good. A year ago, he said, AMD had the biggest operating loss in its history, while in its latest quarter it achieved operating profit margins at over 16 per cent. AMD's business model depends on a high level of fixed costs but Sanders said that once the company's revenues exceeded the break even levels, "a substantial portion" of incremental revenues would fall to the bottom line. AMD has now reached that point, he claimed. AMD had logged more patents in 1999 than its major competitor Intel, Sanders said, registering 825 US patents and making it number 18 worldwide. Over half of the R&D investment was devoted to process technology both on microprocessors and in Flash memory. AMD will expand the capacity of its joint venture with Fujitsu by over 70 per cent this year, and will double production next year. That will mean a third large fabrication plant for Flash in Japan is likely to be built. That will again double capacity by 2002. AMD now has 17 per cent market share of the microprocessor market, compared to 82.1 per cent for Intel. Sanders pointed out that left less than one per cent for other x86 manufacturers, which, he said "had been crushed to virtual extinction by the Intel monopoly". AMD's goal is to have 30 per cent of the PC microprocessor market by the end of next year. The firm is ramping up production at its Texan Fab 25, and will receive revenues from Dresden (Fab 30) by June. The Athlon will form over half of AMD's total PC chips shipped this year, at a figure over 25 million parts, he said. AMD is ahead of schedule, and shipped "tens of thousands" of 900MHz, 950MHz and 1GHz Athlons in March. In Q2, the firm will ship hundreds of thousands and will sell out in Q2, because of strong demand and Intel's problems in matching high clock speeds in volume. By the end of the year, AMD would introduce Athlons with one megabute of level two cache on-die, better power management, and, he said "a few other surprises". There will be more than one member of the 64-bit Sledgehammer family, Sanders suggested. These chips will help AMD to penetrate the high end server and workstation markets. AMD is now a virtual gorilla, Sanders concluded. Next month, the firm will go for a two way stock split, a move that is bound to please AMD shareholders. The share price of AMD closed on Wall Street last night at $85.25, up three dollars on the day. ®

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