STOCKREPORTS		 Advanced Micro Devices, Inc. NYSE Symbol AMD
In S&P 500
19-JUL-97 Industry:
Electronics (Semiconductors)		 Summary: This company is a leading producer of semiconductors that are used principally by the computer and telecommunications industries.

Recent Price 37.31
52 Wk Range 45.00 - 12.38		 Yield Nil
12-Mo. P/E NM

Quantitative Evaluation:
Outlook (1 Lowest - 5 Highest)
2-
Fair Value
36.90
Risk
HIGH
Earn/Div Rank
B-
Technical Evaluation:
BEARISH since 12/96
Rel. Strength Rank (1 Lowest - 99 Highest)
21
Insider Activity
UnFavorable

Overview 14-JUL-97

We forecast sales growth of some 40% in 1997, although this level is highly dependent upon demand for the company's new K6 processor, an alternative solution to Intel's Pentium processor family. AMD has highlighted the attractive price/performance features of the K6 and that it is committed to offering the chip at a 25% discount to comparable Intel chips. While AMD has recently found some success in the Pentium-alternative marketplace, boosted by new product introductions, its ability to grow future revenues depends heavily on the acceptance of this Pentium alternative by OEM vendors, its ability to ramp production of the chip and, longer term, its timely offering of the next generation chip, the K7. Meanwhile, AMD's Flash memory sales are likely to continue to reflect aggressive pricing by AMD as it targets market share. AMD's profitability will depend primarily on its ability to execute its K6 strategy and create high volume demand.

Valuation 14-JUL-97

AMD's Q2 EPS of $0.07 fell short of analysts' consensus estimate of $0.22. However, the stock has not traded off sharply, despite the disappointment, since much of the shortfall came from its older chips and programmable logic devices. Sales of the K-6 were a respectable $100 million in the quarter. We believe AMD's current valuation already includes bullish expectations for K-6 sales and recommend holding the shares. We believe the price of the shares will focus on 1998, and until then will likely remain within the current trading range as investors wait to see the degree of demand for the new chip from PC (personal computer) vendors, and especially those vendors ranking among the top 20. Longer term, we believe AMD has a good opportunity to be the industry's second source for microprocessors after Intel.

Key Stock Statistics

S&P EPS Est. 1997 1.18
P/E on S&P Est. 1997 31.6
S&P EPS Est. 1998 3.25
Dividend Rate/Share Nil
Shs. outstg. (M) 140.3
Avg. daily vol. (M) 2.264
Tang. Bk. Value/Share 14.57
Beta 0.46
Shareholders 10,000
Market cap. (B) $ 5.2
Inst. holdings 62%
Value of $10,000 invested 5 years ago:$ 21,691

Fiscal Year Ending Dec. 31

Revenue (Million $)
1997 1996 1995 1994 1993 1992
Q1 552.0 544.2 620.1 513.1 407.4 407.0
Q2 594.6 455.1 626.2 533.3 409.1 350.0
Q3 NA 456.9 590.4 543.1 418.4 357.0
Q4 NA 496.9 593.0 545.2 413.4 400.0
Year NA 1,953 2,430 2,135 1,648 1,514

Earning Per Share ($)
1997 1996 1995 1994 1993 1992
Q1 0.09 0.18 0.96 0.85 0.63 0.90
Q2 0.07 -0.26 0.86 0.93 0.65 0.43
Q3 E0.38 -0.28 0.52 0.86 0.61 0.51
Q4 E0.64 -0.15 0.52 0.39 0.41 0.73
Year E1.18 -0.51 2.85 3.02 2.30 2.57

Dividend Data: Except for a $0.01-a-share special payment made in May 1995, no cash dividends have been paid on the common stock. A "poison pill" stock purchase rights plan was adopted in 1990.

Business Summary 14-JUL-97

Described as the perennial also-ran of the microprocessor world, Advanced Micro Devices (AMD) is expected currently to be offering its most attractive alternative to market leader Intel Corp. with its new AMD-K6 chip. The chip began shipping in March, 1997, and while touted as "smaller, faster, easier to use, more energy and less expensive than Pentium Pro," by AMD, Intel is expected to be upping the ante in May, 1997, with its Pentium II, also targeted for the desktop market for PCs.

To date, the company has based its microprocessor efforts primarily on the X86 architecture, originally developed by Intel Corp. AMD's strategy has been to serve as an alternative source for X86 microprocessors at comparable prices, but with additional customer-driven features. During 1995, a significant portion of AMD's revenues were derived from the company's AM486DX product family. In March 1996, the company began shipping its next generation of microprocessor products known as the K86. The company's initial K86 product, the 5K86, competes directly with Intel's Pentium family of microprocessors. In March 1997, AMD introduced its K6 family of products, based upon NexGen's sixth-generation NX686 design. AMD acquired fellow chip maker NexGen Inc. for approximately 33.6 million AMD common shares in January, 1996.

Applications solutions products include integrated circuits that work with central processing units to manage selected input/output or other system functions. The company also supplies a range of products designed to add additional functions, improve performance and reduce costs in computer peripheral, interface or mass storage applications. A family of voice/data communications products is also available.

High-volume commodity products include programmable logic devices (PLDs) and nonvolatile/volatile memory devices. Nonvolatile memories retain data when system power is shut off, while volatile memories do not. Nonvolatile memories include Erasable programmable read-only memories (EPROMs) and flash memories. In 1993, AMD established a joint venture with Fujitsu Ltd., known as Fujitsu AMD Semiconductor Limited (FASL), to manufacture flash memories. AMD has a 49.95% equity interest in FASL.

In April 1997, AMD said it began shipping its sixth-generation AMD-K6 MMX processor in volume to PC manufacturers. AMD shipped roughly 350,000 K6 chips in the 1997 second quarter, and has stated that it is ramping production and plans to ship "millions" in the second half of 1997, with 10-15 million shipments in 1998 possible. AMD claims the AMD-K6 processor is the fastest X86 processor for desktop computers, and the current family is offered in products at clock frequencies of 233, 200 and 166 MHz and it plans to offer the 300 MHz by year end.

Capitalization

Long Term Debt: $679,284,000 (06/97).

Per Share Data ($)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Tangible Bk. Val. 14.67 20.09 16.38 12.76 9.91 7.27 5.63 6.39 5.91 6.21
Cash Flow 1.94 5.33 5.24 4.14 4.23 3.30 0.79 2.10 2.01 1.25
Earnings -0.51 2.85 3.02 2.30 2.57 1.53 -0.78 0.44 0.11 -0.72
Dividends Nil 0.01 Nil Nil Nil Nil Nil Nil Nil Nil
Payout Ratio Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
Prices - High 28 3/8 39 1/4 31 3/4 32 7/8 21 1/2 17 3/4 11 3/8 10 1/2 16 7/8 24 7/8
- Low 10 1/4 16 1/8 16 3/4 17 7 3/8 4 3 1/2 7 1/8 7 1/8 7 1/2
P/E Ratio - High NM 14 11 14 8 12 NM 24 NM NM
- Low NM 6 6 7 3 3 NM 16 NM NM

Income Statement Analysis (Million $)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Revs. 1,953 2,430 2,135 1,648 1,514 1,227 1,059 1,105 1,126 997
Oper. Inc. 79.3 8.3 729 480 422 265 77.0 175 185 136
Depr. 333 263 216 175 152 156 128 136 153 153
Int. Exp. 32.5 18.8 10.1 9.8 23.3 25.2 20.2 18.9 18.1 17.9
Pretax Inc. -208 378 470 318 272 145 -54.0 50.0 19.0 -46.0
Eff. Tax Rate NM 30% 34% 28% 9.80% NM NM 7.60% NM NM
Net Inc. -69.0 301 305 229 245 145 -54.0 46.0 19.0 -48.0

Balance Sheet & Other Fin. Data (Million $)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Cash 386 491 378 488 364 301 115 279 287 235
Curr. Assets 1,029 1,097 987 964 738 626 397 594 572 572
Total Assets 3,145 3,031 2,446 1,929 1,448 1,292 1,112 1,122 1,081 1,114
Curr. Liab. 583 622 592 455 353 455 318 276 266 255
LT Debt 445 215 46.2 80.0 20.0 42.0 131 126 130 136
Common Eqty. 2,022 2,100 1,563 1,180 874 611 464 518 472 487
Total Cap. 2,562 2,409 1,854 1,475 1,096 836 794 847 815 859
Cap. Exp. 485 621 549 388 222 111 304 159 133 138
Cash Flow 264 563 511 393 387 291 64.0 172 162 97.0

Curr. Ratio 1.8 1.8 1.7 2.1 2.1 1.4 1.2 2.2 2.2 2.2
% LT Debt of Cap. 17.4 9.0 4.1 5.4 1.8 5.0 16.5 14.9 16.0 15.8
% Net Inc.of Revs. NM 12.4 14.3 13.0 16.2 11.8 NM 4.2 1.7 NM
% Ret. on Assets NM 11.0 13.8 13.3 17.5 12.0 NM 4.1 1.7 NM
% Ret. on Equity NM 15.7 21.2 20.8 31.0 24.9 NM 7.2 1.9 NM

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. Data for 1994 refl. Intel settlement.

Office--One AMD Place, P.O. Box 3453, Sunnyvale, CA 94088-3453. Tel--(408) 732-2400. Chrmn & CEO--W. J. Sanders III. Vice Chrmn--A. Holbrook. Pres & COO--R. Previte. SVP, CFO, Treas & Investor Contact--Marvin Burkett. VP & Secy--T. M. McCoy. Dirs--F. Baur, C. M. Blalack, R. G. Brown, A. B. Holbrook, R. Previte, S. A. Raza, J. L. Roby, W. J. Sanders III, L. Silverman. Transfer Agent & Registrar--First National Bank of Boston. Incorporated--in Delaware in 1969. Empl-- 12,355. S&P Analyst: M. Graham Hackett


This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997