AMD's Q1 Revenues Rise to $1 Billion
Rumors swirl of possible Dell design win, samples from Dresden
By Arik Hesseldahl -- EDN, April 10, 2000
Citing strong sales of PC processors and flash memory, Advanced Micro Devices Inc. (AMD) said last week it will report the first billion-dollar quarter in the company's history.
Jerry Sanders, AMD's chairman and chief executive officer, made the announcement while speaking at an event in Japan. The company reported revenue of $968.7 million for the fourth quarter of 1999 and said that the growth rate for the first quarter of 2000 is about 10 percent. AMD reached its goal of selling 1.2 million Athlon processors during the quarter, Sanders said.
Dean McCarron, analyst with Mercury Research in Scottsdale, Ariz., said that while the market share numbers for the first quarter are not finalized yet, the early numbers suggest a bump in AMD market share from the 15.9 percent it had at the end of 1999. At that time, Intel Corp. held 82.5 percent, while VIA Technologies Inc. brought up the rear with 1.4 percent, McCarron said.
"All the evidence suggests that AMD is sustaining and quite possibly growing their market share," said McCarron. "They're shipping more Athlons, and they are being well-received by OEMs." But AMD's market share is also being bolstered by the fact that it is still shipping large volumes of its K6-2 and K6-III generation of processors, both of which are expected to be phased out later this year, McCarron said.
The revenue announcement goosed AMD's stock last week. Opening Monday with a share price of $59.25, it closed Wednesday at $68.375, and by Thursday morning was trading in record territory, as high as $74.25.
The news came amid renewed reports that Dell Computer Corp., the only top PC OEM still not offering AMD-based systems, might end its holdout. According to published reports, Dell is interested in buying a small number of AMD's forthcoming low-end PC processor, code-named Spitfire.
Of course such rumors are nothing new. During the worst phase of Intel Corp.'s Pentium III supply crunch, it was none other than Michael Dell who pointed the finger at Intel as being at least partially responsible for a softening in Dell's earnings. Around the same time, rumors began to surface that Dell was talking to AMD.
Dell is likely trying its best to keep Intel's feet to the fire, according to Linley Gwennap, principal at The Linley Group in Mountain View, Calif.
"Spitfire is a nice part, but that's not really the issue," Gwennap said. "The issue is having the flexibility of multiple suppliers, and using that leverage against Intel in price negotiations. As long as Dell thinks they are getting a good price from Intel, they will stick with Intel."
In fact, Intel's relationship with Dell is easily the closest that the chip giant has with its PC OEM customers. McCarron said that although the PC OEM's he's spoken with all tend to like AMD's Athlon part, and are now taking AMD more seriously as a potential supplier than in previous years, Dell is still considered the least likely to give in to AMD's overtures.
"I would say that the Intel-Dell relationship seems more strained than it ever had been," McCarron said. "But Dell went with Rambus and with the 820 chipset when no one else would."
But at least one other formerly Intel-only OEM, Gateway Inc., is doing quite well selling AMD-based systems.
"Gateway is making a lot of hay selling Athlon systems, and that may prompt some renewed self-examination at Dell," McCarron said.
For AMD's part, such a design win would be a huge public relations victory. An AMD spokesman said the company is doing its level best to win Dell's business, but that nothing has changed.
On Thursday, Sanders told an audience in Japan that the company is shipping samples of its next-generation high-end PC processor, code-named Thunderbird. An AMD spokesman said two versions of the part will be shipping, one with aluminum interconnects from Fab 25 in Austin, and one with copper interconnects from Fab 30 in Dresden, Germany.
