Advanced Micro Devices Inc (AMD): Target $26 based on 2004 $1.05 earnings...

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rupert

Re: None

Friday, 04/16/2004 9:16:23 PM

Friday, April 16, 2004 9:16:23 PM

Target $26 based on 2004 $1.05 earnings x 25 multiple. This summarises the Schwab Soundview Capital Market opinion.
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AMD : Hector Ruiz's AMD -- The Road to Credibility

AMD delivered a significant 1Q upside with EPS of $0.12 vs. our
$0.01 estimate (consensus $0.03), and provided stronger than seasonal 2Q flat revenue outlook.

Hector Ruiz's AMD is executing extremely well, and we believe will translate into P/E multiple expansion for the shares as the year progresses. Dr. Ruiz was the critical reason why we upgraded the shares earlier this year.

-Margins are expanding at a faster clip than we had expected with 1Q's 37.8% beating our 35% assumption. This trend will continue.

- Flash business now profitable on increasing volumes, better mix and transition to MirrorBit. The 110nm transition is progressing and will further increase profitability in 2004.

- Processors tracked better than seasonal for 1Q, and Athlon64 is ramping on plan and gaining momentum in the enterprise market.

- Raising our price target for AMD to $26 from $23 using a 25 times multiple to our new $1.05 2005 EPS estimate (up from $0.60). Reiterate Outperform for AMD.

Hans Mosesmann
Managing Director, Semiconductor Research
SCHWAB SOUNDVIEW CAPITAL MARKETS