Buying AMD

Wise investors like us are faced with difficult decisions in times like these. We can flee with the pack and go to gold or overseas or coca cola. But there is also the consideration of value buys. 52-wk lows are appearing all over the place. Going against the market is sometimes the right thing to do. Grow some cojones and BUY if you follow. Take AMD.. I have been researching it this morning. Totally destroyed as of late. Down 7% on Friday and down SEVENTY percent over the last year -- this isn't ETFC or some other bank that invested in stone balloons, it's AMD -- they make a physical object in factories. Heck, AMD is trading at .61 price/sales and BELOW its book value per share. I think it's a mistake to focus too much on numbers when picking stocks so let's look at why it got where it is.. their quad core CPU, Barcelona, had a really delayed, screwy release. It basically took all of 2007 to get it out the door and even then it still had some design bugs. Meanwhile INTEL came along and ate up market share with their quad core CPUs. AMD is now finally getting its damn chip out the door but this is happening pretty much in the here and now. Yeah, semiconductors are going to suffer in a downturn.. INTEL took a big hit too but is still up like 6% on their 52-wk. We have to keep in mind that these are truly global companies. There is no real competitor to AMD and INTEL anywhere in the world. China, India, all those guys have to buy chips from those two. And with AMD's notoriously cheaper price, they should be ready to take some market share back from Intel. Isn't this supposed to be the right time to buy a stock (the rest of the market's forecast aside)? When it has already been heavily punished for its mistakes and is ready to regain some ground?

My dear Arawak, You are thought provoking as always. Yet I beg to differ: AMD is a bad run company! they consistently screw up. You are right that AMD and Intel have the moat in the chip business, but i see no reason why Intel won't keep taking share away from them. And finally - these guys are loosing money for crying out loud! 160 million last year. Sorry buddy, with the recession winds coming from the west, the bad management, the huge dip in investor confidence (well reflected in the stock price)... it doesn't sound wise to me. Best of luck, I'm sitting this one out ;) happy investing.

Sit it out, guliamo, sit it out. It's a risky bid for sure. But AMD has come from behind before and can do it again. They are very well aware they are the underdog and have screwed up. You can bet there is some fire under their chairs. Nobody can argue that AMD hasn't made a total mess this past year -- foolish overbid on ATI, late to the party processors, etc. The point is that the market has already taken all that into account and then some. The company is trading below book value! Yes, the CPU world is cut-throat, and yes Intel has vastly more resources than AMD but they have been surprisingly resourceful in the past. As for the processor screwups go, I have to side with their CEO.. "make a CPU is a lot of rocket science and a touch of magic." I am willing to allow that they got a bit unlucky. I read current market sentiment as being along the lines of a yahoo post - "oh my blorg, amd not get processor out right, intel taketh all market share@#$" It's rarely so clear-cut. Let AMD get its processor shipping and we'll see a return to the original power balance.. a re-evaluation of their stock from its current rating of being below book value. At that point I will cash in and drink Duff on the couch all day. Oh, and as far as the "recession winds from the west" impacting AMD goes... here's a blurb from the Intel CEO. ---------------------------- "You have to remember, 75 percent of Intel's sales are non-U.S. ...And there seem to be no signs of a global 'R-word' out there," the CEO declared. Growth in China, India and the world's other developing economies will more than outbalance any U.S. slowdown, Otellini says. -----------------

AMD is now at it's third lowest share value in the past 10 years!!! It has not been this low in almost 5 years. I agree with arawak that it is trading well below book value. Also, several articles I've read recently suggest that AMD has not said its final word, and is prepared to really fight back in 2008 with their new line of improved quad-core Phenom processors. There's also the ace up their sleeve - the Spider platform, of which the Phenom processor is only a part. I believe buying AMD now will prove to be a great play for the non timid investors. And just in case I'm also holding some Intel shares to balance my bet... :)

People people - there is a recession looming! As far as I'm concerned a company that looses money has no book value! Value based on what? market share? - they could loose it easily. terrible product execution? - no thanks. The fact that they are at a 5 year low is no signal that this is a buying opportunity.. sometimes it just means a company is consecutively screwing up and plain old loosing investor confidence and value..

A recession only in the US -- read my post -- these guys get most of their revenue from overseas. Buying them in a hedge AGAINST a US recession! They have had nothing but bad press.. and they know they have screwed up. This is all factored into the stock price. As the head of the processor division put it, "we had three problems in 2007: barcelona, barcelona, barcelona." I like a company that is sweating itself and knows it needs to spend some sleepless nights in order to regain profitability. Trading solely based on past performance is like dating someone because you once liked them.

you know more about this field than me so i concede gracefully.. :) I don't know enough about moats or defending market share in the chip business, actually, I have no idea how to analyze competition in a two horse race.. If you think they are sweating it and have the potential to turn it around than yes, it is a good purchase in my mind.. I feel more comfortable these days in preservation mode and actually.... lately.... I've been thinking... of getting some PG... aoouch!