Analyst Tom Thornhill says he's cutting his estimates and target based on the belief that AMD will face increasing pricing pressure in its processor business, and more competition in its flash business. He notes rival Intel's accelerated x86-64 bit strategy is expected to have a competitive impact in the second half of 2004 and 2005. Also, he notes Intel's shift towards 90nm manufacturing, which should enable the company to lower costs, will enable Intel to use pricing as a weapon against Advanced Micro.
Thornhill cut the $5.2 billion 2004 sales estimate to $5.1 billion, and trimmed the 31 cents earnings per share estimate to 28 cents. He trimmed the $6.4 billion 2005 sales estimate to $5.9 billion, and cut the 87 cents earnings per share estimate to 72 cents. Thornhill lowered the $20 target to $17, and maintains the neutral rating.