The cavalcade of chips was announced today at a relatively upbeat AMD analyst's meeting at the company's headquarters here. Revenues will be above $800 million, stronger than expected for the fourth quarter, CEO Jerry Sanders and other executives said, on the strength of its microprocessor sales and sales of flash memory. Break-even for the company is $850 million, executives said.
At one point during the meeting, Sanders announced that the SEC temporarily halted trading because of the new positive picture. After the halt, AMD shares jumped 5.19 to close at 28.19
"The 750-MHz Athlon systems should be available from top-tier [computer] makers] by year's end, a quarter ahead of schedule," Sanders said. "There is no question we are moving up the food chain. We're experiencing a strong quarter. Demand for all our products is robust."
With a 750-MHz processor, AMD will take away the performance crown from Intel, which has put out a 733-MHz and isn't slated to speed up its processors until an 800-MHz Pentium III next year. Of course, there is also a theoretical element to the debate. Intel's 733-MHz chip is right now nearly impossible to find, said several sources. AMD's 700-MHz Athlon, announced in October, only seems to be emerging in numbers now.
Even so, AMD has planned out an aggressive chip road map through the end of 2000. In the first quarter, AMD will release 800-MHz versions of the Athlon and continue to manufacture more of its chips with copper, rather than aluminum, wires, which is expected to boost performance.
By the middle of the year, AMD will release "Thunderbird," a new version of the Athlon that will contain, for the first time, an integrated secondary cache. Caches are small memory reservoirs for processors. Although many chips have secondary caches, performance goes up when it gets integrated into the same piece of silicon. Intel recently integrated the cache into its "Coppermine" Pentium IIIs.
Thunderbird will run up to 1 GHz. Simultaneously, AMD will release a scaled-down, less-costly version code-named "Spitfire." Although built on the same chip core, Thunderbird and Spitfire will differ in speed, packaging, bus speed, and cache size so that AMD can fit into as many market segments as possible, said Rob Herb, senior vice president of sales.
By the end of next year, AMD will debut a high-end chip code-named "Mustang" that will work in powerful servers with two, four, and eight CPUs, he said. The Mustang chips will come with as much as 2MB of cache built into the Mustang for mobiles.
The company has also not forgotten the low-end. A 533-MHz version of the K6-2 will come out this quarter, said Sanders. Then, in 2000, AMD will release the K6-2+ and K6-3+, two new versions of those chips based around the more advanced 0.18-micron architecture. The move from 0.25-micron manufacturing will allow the chips to run faster, the company said.
The company will likely also begin to win over more customers. Although Gateway recently phased out AMD processors in its line, the company is likely to start using the high-end Athlon, said Robertson Stephens analyst Dan Niles in an interview. HP and others also seem to be working with AMD.
"IBM is getting production [for Athlon chips]. HP is getting production. Everyone except Gateway and Dell is getting production," he said
IBM doesn't use AMD chips in its workstations at present but will continue to evaluate AMD chips in the future, said Doug Oathout, worldwide product brand manager for IBM workstations. "They're going to make Intel squirm," he said of upcoming AMD chips.
Though AMD representatives wouldn't comment on whether HP would buy Athlons, AMD's Herb said the company expects to have several different 750-MHz chips for sale during the quarter. HP currently sells relatively low-end K6-2 chips from AMD.
"(Athlon) will be the top end processor in a number of machines," he said.
Analysts were optimistic about today's news from AMD. Niles raised his estimate for the quarter from a loss of 60 cents per share to a loss of 10 cents per share. For 2000, he raised his earnings from a profit of 35 cents per share to 70 cents per share. Niles said the Athlon chip is being accepted and that Intel's top-end chips are just not available in sufficient quantities.
Sanders further added that AMD should hit its goal of manufacturing 800,000 Athlons this quarter and will be capable of making 25 million total processors, including K6-2s, next year. In addition, the low end of the market continues to do well. "We're sold out of everything for K6-2," for the quarter, Sanders said. Ben Anixer, another company executive, said revenues will be "comfortably above" $800 million.
Sanders also described the reasoning behind AMD's code names such as Spitfire, Thunderbird, and Mustang. "We changed code names from fighter planes to sports cars in deference to our colleagues in Germany," he said. AMD has recently opened a new chip factory in Dresden, Germany.