Sunday, June 11, 2006

Joe Osha paints grim picture for Intel's 2Q06

Joe Osha wrote in his analysis of Intel :

We are lowering our Q2 revenue estimate to $7.8 billion, below the company’s forecast range of $8.0-8.6 billion, and our earnings estimate goes from $0.14 to $0.10.

In 4Q05, Intel had revenue of $10.2 billion; in 1Q06, $8.9 billion. Now we are looking at $7.8 billion for 2Q06. But, Joe Osha missed something important here. As I pointed out, Intel may see GAAP loss in 2Q06 due to impairment of goodwill and other charges. From 3Q06 onward, Intel should see operating losses.

Back in Feburary 2006, I projected 15-20% fall of Intel's revenue in 1Q06. This has come true. At that time, I also projected even larger revenue drop in 2Q06. In March, I projected operating losses for Intel from 3Q06 onward.

Looking at Free Cash Flow (FCF), Intel and AMD were almost at the same level as of 1Q06.

I reaffirm my projection that Intel may suffer losses in the next seven quarters. If AMD executes the kill strategy I proposed, the total collapse of Intel can be expected by mid 2008.

Joe Osha re-iterated his "buy" rating on Intel and "sell" rating on AMD, while his firm is busy dumping and buying. Joe's bonuses may get reset to much higher this year, I guess.

32 Comments:

Anonymous Anonymous said...

According to your analysis, Intel should be in desperation rush right now.

Well, it is. Still, Intel's a hell of a profitable company, and is about 10x the size of AMD!

Sharikou, which issues in Intel's actual business model you can point out, that would cause such demise?

2:03 PM, June 11, 2006  
Blogger Sharikou, Ph. D said...

Still, Intel's a hell of a profitable company, and is about 10x the size of AMD!

Look closer, Intel is not so impressive
1) Revenue from CPUs, Intel was at $6.2 billion and AMD was at $1.3 billion in 1Q06. Since Intel's revenue will drop by $1.1 billion from 1Q06, I expect its CPU revenue to drop to $5.5 billion. I also expect AMD's CPU revenue to increase to $1.5 billion.

2) Balance sheet: I pointed out that Intel has run out of cash.

2:12 PM, June 11, 2006  
Anonymous Anonymous said...

My biggest disappointment in AMD is that they have yet to release any low-cost dual-core processors. Although Intel’s Pentium Ds consume a hell of a lot more power, and will be crippled a bit in the move to Windows Vista, their rock bottom prices keep them very attractive. If AMD could have released some slower processors, starting around $180-240ish, then their dual core chips would appeal a lot more to the lower mainstream market. Instead, you have to splurge up to around ~$295 to get into AMD’s dual core scene. Although some lower clocked, cheaper AMD dual cores would have somewhat mediocre performance (that 805 Pentium D is ridiculously overclockable…), it would be more than made up for by the appeal of living on an AMD platform, and much, much lower power consumption. AMD would have been able to “frag” Intel in the last couple months if they had done this, but their possibilities are becoming more limited. Conroe will be a lot more competitive… and the low mainstream really doesn’t care about how well the chips scale yet.

2:16 PM, June 11, 2006  
Blogger Sharikou, Ph. D said...

My biggest disappointment in AMD is that they have yet to release any low-cost dual-core processors.

I have suggested to AMD that they should do a dual core Sempron when Intel released the PD 805. AMD does have an Athlon X2 3600+ for emerging markets. The price is about $180, but only for OEMs. I think AMD should bring it to the US market with on the AM2 socket.

2:23 PM, June 11, 2006  
Anonymous Anonymous said...

Isn't this the same Joe Osha guy you were decrying a few posts back?

Just checking, you know?

2:38 PM, June 11, 2006  
Blogger Sharikou, Ph. D said...

Isn't this the same Joe Osha guy you were decrying a few posts back?

I always said Joe Osha is smart. Even though he always kept a "sell" rating on AMD. You see, he works for Merrill Lynch, which is busy dumping INTC and buying AMD. Get it?

3:05 PM, June 11, 2006  
Anonymous Anonymous said...

How come Merril Lynch increased its Intel portofolio by 40% this year ?

3:17 PM, June 11, 2006  
Blogger Sharikou, Ph. D said...

How come Merril Lynch increased its Intel portofolio by 40% this year ?

You got it wrong. ML dumped 40% of its INTC, or 9.652 million shares. It increased its AMD holding by 475%. The above is based on most recent data.

3:21 PM, June 11, 2006  
Anonymous Anonymous said...

Before AMD can supply 100% of the CPU market. It should focus on the most profitable market (The high-end). That is making money.

Only then, AMD could hurt Intel to compet with its low-end products. That is a kill.

3:31 PM, June 11, 2006  
Anonymous Anonymous said...

i totally agree with you, doc. if amd is willing to sacrifice some margin in its desktop processor market and make some decent modification, the 4 x 4 launch is ready any minute. current athlon x2 and athlon 64 processors are actually opteron in some degree, except that the 3 HT link been neutered by a laser so that only 1 HT link remain. opteron 2xx series has 1 HT link neutered as well. the only remaining healthy full grown opteron are the opteron 8xx series.

i believe that amd originally made some poor decision in term of neutering its athlon x2 line and opteron 2xx line in favor of protecting its profit margin for the 8xx line. such action backfire on them right now as people who want 4 x 4 platform must shield out tons of money for a completely new platform that can incorporate 2 sockets AM2 rather than just purchasing a new motherboard and pay only the cost of a second athlon x2 cpu in socket 939 format.

for top notch capacity increase, amd can actually contract ibm (who is also one of the topest and biggest fab owner in us) to process its SOI and move to 65nm process forward and ahead of schedule. this move can provide amd an almost immediate speed up immediately realizing better yeild at higher speed grade without immediately absorb the complete cost of building a new fab since i am a person who just like to use tried and true approach in term of my computer use, i will be more likely to use the following system configuration as my new home system when windows vista comes out of the gate.

existing system:
athlon x2 3800 939
4 x 512mb ddr 400 ecc ram
asus a8n-e mb (with replaced chipset fan into a passive heatsink)
7800gtx 256mb video card
40gb ide boot
4 x 80gb onboard sata raid 10 array
2 x 200gb sata 150 on separate hardware raid pci-x card
all powered by an antec 550w psu without a hitch
run winxp pro

so far system stable without crash for 93 days without reboot. gotta praise asus and amd quality control.


plan:
2 x opteron 265 HE
(which gives me 4 core without burning my watt)
tyan thunder mb with 2 x pci-e 16x link
1 x NVIDIA based Dx10 compatible video card in future
(perform better than existing 4 x core SLI solution and much less power hungry)
8 x 1 gb reg ddr 400 ecc
pci x u320 15k 36.7gb as boot (existing)
sata 150 raid 5 6 port lsi as storage (existing)
2 x 200gb sata 150 data raid 1
(existing data array)
4 x 320gb sata 150 wd re
(new data array)


by the time for vista to be release, this whole upgrade should not cost me more than $1200 since the above equipment are mostly considered by some as outdated.

hopefully such setup will provide me another computer cycle life for next 3 yrs.

sunhing

3:57 PM, June 11, 2006  
Anonymous Anonymous said...

Is any one for a Coke and Pepsi ??
This seems more likely

4:07 PM, June 11, 2006  
Anonymous Anonymous said...

I have to say this, normally I enjoy reading your blog… but today it has brought disappointment.

“If AMD executes the kill strategy I proposed, the total collapse of Intel can be expected by mid 2008.”

How can you possibly believe that a company with 10,000 people can take down a company with 100,000 people? AMD total revenue for 2005 5.85B, Intel was 38.38B. AMD’s total revenue is only 15% of Intels.

That is a ridiculous statement and is only showing your lack of intelligence. I understand your allegiance to AMD, and how much you dislike Intel.

For shits and grins what happens if Intel collapses. I mean really, what is going to drive AMD to spend billions of dollars on R/D? Definitely not shareholders. Is there another company out there that is going to step up and compete with AMD? Is there a company with the capital to even do this? Or a company that could step in where Intel left off and buy some of their FABS? You have got to see some of this.

Take off the bllinders. The only people you even humor with this are idiots, and for some reason thay too hope this will happen.

Intel is here to stay, they are too big.

5:30 PM, June 11, 2006  
Blogger Mad Mod Mike said...

"opteron 2xx series has 1 HT link neutered as well." - Sorry, but you are wrong. All AMD64 CPU's have all 3 HT Links working, they are not cut off with a laser, these are not animals sir.

For example: Look at the TYAN K8WE Thunder: It has CPU0 using ALL 3 of its HT Links, 1 for CPU to CPU, 1 for PCI-X and 1 for NB. As I am trying to tell people, ALL AMD64 CPU's have ALL 3 HT Links available, just not used currently.

6:16 PM, June 11, 2006  
Anonymous Anonymous said...

Grim outlook and AMD havn't even release their AM2 opterons yet,
Merrill Lynch are crooks only fools use them to trade stocks.
google "crooks and Merrill Lynch" they are the kings of con.
About time they got some payback!

10:55 PM, June 11, 2006  
Blogger Ajay S. said...

"My biggest disappointment in AMD is that they have yet to release any low-cost dual-core processors."

Intel is unable to get higher prices for its processors, thats why they are priced so low. As Sharikou points out, even with those low prices, they are still unable to clear inventories.

AMD has no such problems now, with Athlons and opterons selling well. Semprons and low cost Athlons may exist only to help them maintain minimal presence in Third World markets.

Why would they introduce low cost products when people are ready pay for whatever rolls out of their fabs? Conroe may change things, but AMD would surely have come up with a statergy by now to keep their fabs running at full steam then. The last thing they would want is to pre-announce their statergy and create the same "osborne" effect that Intel is partially suffering now.

My bet is that AMD will roll out low cost processors that go on 4x4 motherboards. The total cost will be in conroe system price envelope while providing 1.5x performance.

Remember, AMD has sucked out enough juice from its 90nm equipment, and highend 65nm products should start rolling out early next year to maintain margins. This low cost chips will be like the last runs on ageing equipments that need to keep producing till ther replacements arrive. Intel meanwhile, has been forced to slash prices of their 65nm products even before the equipment reachs its midlife. They dont seem to have huge margins with conroe or woodcrest either.

10:56 PM, June 11, 2006  
Anonymous Anonymous said...

How can you possibly believe that a company with 10,000 people can take down a company with 100,000 people?
Do you know Google.com with 6000 people on board winning with Microsoft? Or Microsoft winning with IBM a few years ago?

100,000 or million is not going to invent a wheel or CPU. It takes time and from design point of view Intel is behind AMD.
Intel Conroe is similar to AMD Athlon64 without Hypertransport.
2003 design vs. 2006.
3 years behind. And it doesn't matter that it is 10% faster. Because it is the same performance level, not 3 years more advanced.

11:06 PM, June 11, 2006  
Blogger duploxxx said...

nice said:

"3 years behind. And it doesn't matter that it is 10% faster. Because it is the same performance level, not 3 years more advanced."

it is true that intel made there instruction set larger and added a fast cache in front of the core... but multisock will still be an issue due to the fsb limit.

here is a nice review whats wrong with the new core "design" against an 3j old k8. from 2threads on it just lacks performance because he has to share its cache

http://techreport.com/etc/2006q2/woodcrest/index.x?pg=6

12:30 AM, June 12, 2006  
Anonymous Anonymous said...

I am a system builder (mostly dual socket opteron systems for heavy rendering tasks), from some distant country and I am facing customers dilemmas every day now. No one is talking about the hold effects that this too early promotion publications is causing. The business is low and there are too many reasons to wait and see.
Sharikou, I really hope you are right because we both are going to look for a new job ones your wrong.

7:53 AM, June 12, 2006  
Anonymous Anonymous said...

"100,000 or million is not going to invent a wheel or CPU"

No, but 100,000 employees will make the government step in if they get into financial trouble.

8:30 AM, June 12, 2006  
Anonymous Anonymous said...

"The total cost will be in conroe system price envelope while providing 1.5x performance."
are you sure this is true?
i'm even questioning myself... can two FXs perform up to par to an X6900?

wake up, and smell the coffee..

11:12 AM, June 12, 2006  
Anonymous Anonymous said...

"100,000 or million is not going to invent a wheel or CPU. It takes time and from design point of view Intel is behind AMD.
Intel Conroe is similar to AMD Athlon64 without Hypertransport.
2003 design vs. 2006.
3 years behind. And it doesn't matter that it is 10% faster. Because it is the same performance level, not 3 years more advanced. "

hello! AMD fanboy
any..uh... proof on how Conroe is similar to A64? if they are similar, then why does COnroe have almost a 10~20% of advantage compared to FX?

wow.. 50% of increase in performance/watt, and you classify both "Conroe and FX" to be in the same performance level?

wake up...wake up...wake up...and smell the defeat of AMD's k8.

11:25 AM, June 12, 2006  
Anonymous Anonymous said...

Article from The Inquirer:

"Dump Intel shares and run, says analyst

Dead money"

http://www.theinquirer.net/?article=32362

Basically, others are echoing the sentiment that not all is well in the Intel camp.

If I was an Intel shareholder, I would be extremely ticked off right now.

11:42 AM, June 12, 2006  
Anonymous Anonymous said...

What is the government going to do to help?
A)Nothing
B)Teach Intel how to make good processors

The only plausible answer is A.

11:52 AM, June 12, 2006  
Anonymous Anonymous said...

"3 years behind. And it doesn't matter that it is 10% faster. Because it is the same performance level, not 3 years more advanced."

Intel's litographic process and machinery are top-notch, years ahead of competition. They're left too much obssessed with all this marvel, though.

Customers don't care if their cpu is produced at 65nm or 45nm. These specs are impressive for their fellow engineers, but aren't worth it otherwise.

Intel throws torrents of money into the latest and greatest but such strategy alone doesn't work anymore, with very aleck competition on its heels.

12:24 PM, June 12, 2006  
Anonymous Anonymous said...

"What is the government going to do to help?
A)Nothing
B)Teach Intel how to make good processors"

Thats pretty funny... but im guessing your one of the people who thinks everything will be great if Intel disappears, and everyone has to use AMD?

1:28 PM, June 12, 2006  
Anonymous Anonymous said...

"Thats pretty funny... but im guessing your one of the people who thinks everything will be great if Intel disappears, and everyone has to use AMD?"

I didn't say that nor did I imply it. I was simply stating that the government can't do anything to help Intel. I'm guessing you're one of the people who jumps to stupid conclusions (logic ftw.)

1:44 PM, June 12, 2006  
Anonymous Anonymous said...

respond to mod like mad:

try putting 4 opteron 242 in a quad socket tyan motherboard and see if it will boot properly. since opteron 2xx only has 2 ht link enabled, only the first 2 cpu will be recognized by the os. cpu 0 and cpu 1 respectively. this is now amd can charge a premium for their opteron 8xx series.

sunhing

5:07 PM, June 12, 2006  
Blogger Mad Mod Mike said...

"try putting 4 opteron 242 in a quad socket tyan motherboard and see if it will boot properly. since opteron 2xx only has 2 ht link enabled, only the first 2 cpu will be recognized by the os. cpu 0 and cpu 1 respectively. this is now amd can charge a premium for their opteron 8xx series."

So you're going to tell me the motherboard K8WE which is for 2 socket 2xx boards, even though CPU0 uses ALL THREE HT links, it's a lie? Sorry man, you're a moron.

http://www.tyan.sk/image/s2895_bd.png

6:26 PM, June 12, 2006  
Anonymous Anonymous said...

"I didn't say that nor did I imply it. I was simply stating that the government can't do anything to help Intel. I'm guessing you're one of the people who jumps to stupid conclusions (logic ftw.)"

My appologies, I did jump to a conclusion.

The government could definetly help...

For starters it would be benificial to NOT have a monopoly of sorts.

More and more people are getting into computers, there needs to be a supply. AMD could not produce 100% of the global markets needs.

Thats 100,000 jobs, IRS revenue, alot of money... I dont think Intel employees are making minimum wage.

I'm sure there are a few others out there.

Again my bad, but this just makes sense.

8:34 PM, June 12, 2006  
Anonymous Anonymous said...

respond to mod like mad again:

if that a 242 opteron that support ccHT will work like a 8xx series as according to the tyan diagram you have displayed, why wouldn't the 1xx, 2xx series work in a quad socket system? as far as i know, 1xx, 2xx, and 8xx are all the same and each of them got some post manufacturing mod by amd to make them become what they are.

suppose 1 2xx processor has 2 ccHT links as you described, the following topology should work:

242 ---- 242
| |
| |
242 ---- 242

however, my company server only work with 8xx series of processor.

mod like mad, thx in advance if you can teach me how to fit the (4) opteron 265HE into my company's quad board if possible. currently it is running on 840 series and need a much need upgrade.

sunhing

9:06 PM, June 12, 2006  
Anonymous Anonymous said...

respond to mod like mad:

the tyan mb that you have shown, actually the 2050 chipsetand amd 8131 will work even if there was only 1 2xx series opteron installed, without installing the second processor, i would assume the correct topology of the actual electrical layout (without ram) should look like:

2xx --- 2xx --- nv 2200 pci-e 16x
|
|
nv 2050 pci-e 16x
|
|
amd 8131

since the nv 2200 and 2050 is actually kinda of rebranded nvidia nforce4 32x SLI (tm), you might want to read nvidia's reference manual. nforce4 pro 2200 chip should be having 2 HT link so does the 2050 slave chip.

sunhing

9:16 PM, June 12, 2006  
Anonymous Anonymous said...

respond to mod like mad:

you might want to check out amd's opteron system design guide at:

http://www.amd.com/us-en
/assets/content_type
/white_papers_and_tech_docs
/30925.pdf

at page 36 is specified the following:

1xx has 1 ccHT
2xx has 2 ccHT
8xx has 3 ccHT

since all 3 were based on same die silicone from manufacturing process, their differentiation must be coming from post manufacturing. the usual process of permanently prevent amd fan from converting 1xx and 2xx to 8xx at our freewill is from laser cutting certain circuits on die on permanent basis. intel has been doing this with their 478 celeron line which all begins their life as a pentium 4 478 usually due to selective failure of certain cache banks of sram

sunhing

9:37 PM, June 12, 2006  

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