Yes, I believe the concerns are valid.. Although the Intel CEO did go on record saying international growth would make up for the drop in US sales. AMD is moving to a fab-less strategy.. meaning they will outsource the development of their chips. Technically, it's a risky move because now you have a lot more third parties in your supply line and contract-manufacturers may not always have the most advanced equipment.. But, at the same time that move, IMHO, would be conducive to cost savings in a market of weakening demand. Just because predicted sales are going to slump doesn't mean a company can't be profitable.. it just needs to scale accordingly. It's not like people aren't going to be buying PCs. There's a lot of hoopla about the growing middle class in China and India buying cars.. well, they're also going to be buying PCs.. probably cheap PCs.. AMD-powered PCs. Intel is trading at a P/E of 22, AMD is trading below book value and is down like 70% in the last year. Guess which one stands a chance of going green in a weakening market? Anecdotally, there was a publication yesterday about AMD powered PCs needing a lot less power due to the RAM they use -- that's a small win for AMD and one they can market with. All-in-all, I really like the idea that AMD is sweating bullets and feeling the lash of the whip across their backs. I believe those dogs can pull themselves back together.
I think you closed with our main point of difference... You believe the whip will do good.. i think if you have to whip a company - that's already bad right there.. I can't agree with your rationalization of demand shrinking actually being an oppertunity.. and out sourcing production of your core product sounds like more trouble right there... You're a true rebel amigo.. I prefer my fruit already peeled :)
I would also offer that what matters is not so much how a company is doing in terms of its track record but rather its stock price in relation to its performance. Look at your darling AAPL. they revealed a new whiz-bang laptop today but got slapped a 7% loss as everyone realizes that a recession will take a toll on luxury items like theirs. The peeled fruit has started to get a bit too ripe. Have they been punished enough? with a p/e of 40, perhaps not! AMD, meanwhile, has already been kicked out of the house and ridiculed in front of the whole town.. but they're not going bankrupt and a couple of small victories might give them a more normalized p/e which spells major profit for me.
I'm relying on analysts predictions that by the end of the year AMD's stock will be going for 12$. As they are going for 6 now, that means doubling your money. I don't agree with guliamo's opinion that AMD is a badly run company. The chip industry is a cut throat business and AMD has simply had a bad year in 2007. Lets face it, Intel were simply better. But this company has surprised more than once in the past when some people were all but ready to call them a dead horse. From what I'm reading they have a few surprises lined up for 2008.
Exactly.. and they don't need to "beat" Intel, they just need to keep their R&D pipeline running, work out the kinks in their chip, and turn a profit. Once they can show a positive EPS, the stock almost has to go above book value. Market sentiment obviously has a huge influence on stock price.. but to keep looking at the past is to miss a buying opportunity.
Though my rank precedes your own i humbly accept your wise words. I think you are right that unlike other companies on my watchlist, such as garmin.. AMD is less of a fashion product and more a "must have" in the computer / server / information business.. for this reason I think both ARAWAK and KOHALZA are right to be eying this business.. I also agree that with such a blow - expanding up is a real option for AMD and certainly a wise choice. I'm going in to get my toes wet... the water is collllddd.... haste you guys :)
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Top 74%
arawak
Jan 15 at 5:28 ET
Yes, I believe the concerns are valid.. Although the Intel CEO did go on record saying international growth would make up for the drop in US sales. AMD is moving to a fab-less strategy.. meaning they will outsource the development of their chips. Technically, it's a risky move because now you have a lot more third parties in your supply line and contract-manufacturers may not always have the most advanced equipment.. But, at the same time that move, IMHO, would be conducive to cost savings in a market of weakening demand. Just because predicted sales are going to slump doesn't mean a company can't be profitable.. it just needs to scale accordingly. It's not like people aren't going to be buying PCs. There's a lot of hoopla about the growing middle class in China and India buying cars.. well, they're also going to be buying PCs.. probably cheap PCs.. AMD-powered PCs. Intel is trading at a P/E of 22, AMD is trading below book value and is down like 70% in the last year. Guess which one stands a chance of going green in a weakening market? Anecdotally, there was a publication yesterday about AMD powered PCs needing a lot less power due to the RAM they use -- that's a small win for AMD and one they can market with. All-in-all, I really like the idea that AMD is sweating bullets and feeling the lash of the whip across their backs. I believe those dogs can pull themselves back together.
Top 1%
guliamo
Jan 15 at 7:02 ET
I think you closed with our main point of difference... You believe the whip will do good.. i think if you have to whip a company - that's already bad right there.. I can't agree with your rationalization of demand shrinking actually being an oppertunity.. and out sourcing production of your core product sounds like more trouble right there... You're a true rebel amigo.. I prefer my fruit already peeled :)
Top 74%
arawak
Jan 15 at 9:24 ET
I would also offer that what matters is not so much how a company is doing in terms of its track record but rather its stock price in relation to its performance. Look at your darling AAPL. they revealed a new whiz-bang laptop today but got slapped a 7% loss as everyone realizes that a recession will take a toll on luxury items like theirs. The peeled fruit has started to get a bit too ripe. Have they been punished enough? with a p/e of 40, perhaps not! AMD, meanwhile, has already been kicked out of the house and ridiculed in front of the whole town.. but they're not going bankrupt and a couple of small victories might give them a more normalized p/e which spells major profit for me.
Top 2%
Kohalza
Jan 15 at 11:13 ET
I'm relying on analysts predictions that by the end of the year AMD's stock will be going for 12$. As they are going for 6 now, that means doubling your money. I don't agree with guliamo's opinion that AMD is a badly run company. The chip industry is a cut throat business and AMD has simply had a bad year in 2007. Lets face it, Intel were simply better. But this company has surprised more than once in the past when some people were all but ready to call them a dead horse. From what I'm reading they have a few surprises lined up for 2008.
Top 74%
arawak
Jan 15 at 11:57 ET
Exactly.. and they don't need to "beat" Intel, they just need to keep their R&D pipeline running, work out the kinks in their chip, and turn a profit. Once they can show a positive EPS, the stock almost has to go above book value. Market sentiment obviously has a huge influence on stock price.. but to keep looking at the past is to miss a buying opportunity.
Top 1%
guliamo
Jan 16 at 12:33 ET
Though my rank precedes your own i humbly accept your wise words. I think you are right that unlike other companies on my watchlist, such as garmin.. AMD is less of a fashion product and more a "must have" in the computer / server / information business.. for this reason I think both ARAWAK and KOHALZA are right to be eying this business.. I also agree that with such a blow - expanding up is a real option for AMD and certainly a wise choice. I'm going in to get my toes wet... the water is collllddd.... haste you guys :)