Monday, November 27, 2006

A quick note on Dell's Q3

I've been away and pretty busy but I wanted to do a quick note on Dell's Q3. This was obviously a strong rebound for Dell in terms of revenue and more importantly profits even though HP grew share faster than them. I think primarily this quarter their move to Opteron in servers has definitely helped them. I also think their focus on trying to move their higher margin products has helped somewhat. But long term I continue to remain concerned by their lack of new strategic direction.

Their growth in China also I think will come under threat over the next 3-4 quarters as Lenovo trains their sights on Dell. And HP will not be happy knowing that Dell is managing to grow in spite of the fact that they have wrenched the #1 spot from them. All in all, I think Dell will probably have a good Q4. But by Q1 Lenovo and HP will start to attack them in desktops & servers respectively. Which means unless HP gets their act together Dell does have a relative opportunity in the notebook business. I am doubtful their Q3 results were really helped by their move to Turion since that was much later in the quarter. I suspect what happened their is they had their sales people focus on selling up in what is a very rapidly growing category.

Thoughts everybody...?

Friday, November 17, 2006

Intel increases dividends starting Q107

Intel increases dividends

After announcing a Q406 dividend, which I discussed here:

To further raise the dividend is not the sign of a company worrying about their cash position. What's going on here? Something has happened to give the board confidence that they can not only afford a dividend, they can increase it.

Wednesday, November 15, 2006

Nvidia making out with Intel - I called it in September

I had said back in September that Nvidia and HP would get more aligned with Intel post the ATI acquisition. The Nvidia piece of that has started to materialize.

I'm thinking this is only the first step and there will be more to come between Nvidia and Intel. To read the original post, go here:

New Bed-fellows

So far this week that's 2 predictions come right - this and the demise of the PIC.

Monday, November 13, 2006

PIC is dead - I called it in September

In their quarterly filing AMD cancelled PIC. Scroll down to page 32:

AMD Q3 filing

I called this back in September when I said the cash being spent behind the ATI deal would force Hector to review which projects he continues to fund and perhaps the PIC would disappear.

New Bed-fellows
(Scroll down the post)

The point is not PIC itself which has very little material impact on AMD"s revenues. The point really is that AMD will have to now start to manage cash and debt very carefully and they will not be able to invest in as many areas as they have been. The second message in here as that Hector's 50x15 vision becomes only rhetoric. Which is unfortunate for the people who could have benefitted from it...but that's life. In this case, they definitely lived up to their slogan of "Smarter Choice". Just it was the smarter choice for themselves this time round -:)

Thursday, November 09, 2006

The Doctor is making money off Intel

The good Doctor of Pervasive 64 bit Disinformation has started running Google ads. I have nothing against this. All power to him if he can make money writing what he writes best. However, what I cannot understand is that he has ads promoting Intel products on his page. Surely his ethics would prevent him promoting Intel's products since he believes they all deserve to be consigned to a landfill. I left him a post yesterday asking what was going on but he did not post my comment. Here's the screen grab:

See it for yourself:

I tried clicking the ad links at the bottom of the page...
Link to article

...and for 3 out of 4 the first link on the subsequent Google ad page took me to Intel's web site. That's just hilarious man! I really hope the Doctor is getting a good laugh too...hopefully to the bank with all the money I hope he's making from Intel via Google.

Dell deploys Quad Core

Dell with Quad Core Xeons on day 1. That's some time to market and endorsement:

This is where the rubber hits the road and all the talk about K8L disappears into thin air as the product still does not exist. At this point all the dudes who are fantasizing about how AMD's quad core will kick Intel's ass get a dose of reality. It doesn't matter if your architecture is superior. If the product isn't in the market you ain't selling it. By Q2 Intel will have introduced more flavours of quad core desktop parts and dropped prices significantly below 999$ which is the launch price. In Q2 (hopefully) or perhaps Q3 AMD will introduce their quad core part but will not be able to price it in the same range as Intel will have almost a 3 qtr advantage to stabilize yields and reduce manufacture costs on the part. AMD will then have to play catch up again as Intel begins 45nm late 2007 followed by new mArch in 2008.

On a seperate but related note, Apple introduces the new Macbook with Core 2 Duo.

Welcome to the party. It's about to get interesting!

The opening line was meant to be "Dell with Quad Core Xeons on MINUS day 1. That's some time to market and endorsement:"

The implication here is the official Clovertown launch is actually 14th Nov. Dell has jumped the gun and also jumped every other OEM. There's a message in here and it's a Dell message...not Intel or AMD. Dell needs to win in servers to drive their margins up. Specially since they are losing share to HP.

Wednesday, November 08, 2006

Whose CPU margins are better

A very quick note. There is some wild gesticulation from the AMD "fannies" that AMD's CPU margins and cost structures are better than Intel's based on some ridiculous calculations (which I have already pointed out are baseless) from my good friend the Doctor. Here's why this is inaccurate and just a bunch of hand-waving from the AMD fans:

1. In Q3, Intel and AMD's gross margins were almost identical. However, AMD's margins are only for the high margin business of CPUs while Intel's are for CPUs + other businesses with significantly lower margins like flash, chipsets, mobos, etc. Furthermore, businesses like flash are actually a drag on profits recording a 116 million $ loss in Q3. On a CPU revenue of 5.8 billion out of a total 8.7 billion Intel's CPU margins would be significantly higher than the ~50% it recorded.

2. If AMD's margins are so good, why is it that it's net income for Q3 is only 1/10th of Intel's in spite of the fact that it's CPU revenues and market share are roughly 1/4th Intel's. And this is after Intel's net income being reduced by ~740 million due to Flash and Other losses.

The answer to both these is simple. Not only is Intel's cost structure better, it's ASPs are higher in the CPU business.

Sunday, November 05, 2006

Channel unhappy with AMD

First - I have been pretty busy last couple of weeks to post regularly to the blog. Instead, I've been trying to ensure comments get through and I can respond. Hopefully things will ease out this week and I'll be able to finish my Q3 take which has been in draft for some time. This post isn't a deep analysis. It's more to confirm the DIY channel frustration with AMD for shorting them on supply is starting to become visible with more re-sellers becoming vocal:

The impact of this to AMD is if this festers for another 2 quarters then it will take them a long time to win back channel trust/confidence even if supply does normalize. Those who work in the industry will understand this. Those who don't will issue blistering comments that they day AMD's supply problem is resolved, the channel will come running back to them. But that's not the way it happens. For the small guy round the corner, he feels screwed when either AMD or Intel give deeper discounts or supply preference to the big OEMs. It makes it incredibly hard for them to compete and watching a sale walk away because you didn't have the product is like seeing food on the table disappear. Intel has taken 2 years to recover from the chipset shortage. If this precipitates for AMD, they will lose a significant amount of channel momentum which will hurt them late next year once 65nm is ramped.