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I have posted on AMD before but wanted to sum up my thoughts. In the interest of full disclosure I am cost-averaged in AMD at 6.11

Let's get the obvious out of the way -- AMD is no poster child for how to run a company. Their technology roadmap is littered with "Road Closed," "Detour," and "Expect Delays" signs. Having bested Intel with the initial release of the Opteron chip, they have steadily lost market share ever since. The Phenom desktop processor is a mild disappointment and the new wave of Opterons are late to the party and performing sub-par compared to Intel's chips. Their acquisition of ATI was a disaster in that they overpaid by billions and had to subsequently record write-downs of their new graphics division.

The market has pummeled the stock and then some.

At first glance it seems counterintuitive to buy a company that has disappointed at every turn. Indeed it goes without saying that only growth, risk-tolerant investors should buy into AMD. There are, however, arguments in favor of an AMD buy at this price level:

- the stock price appears to have comfortably bottomed (discounting today's bump) at around $6.00. While the company has yet to return to profitability (a promise of the CEO for Q3), it is trading barely above its book value. It wouldn't take much in the way of good news to push AMD higher whereas INTC has traded in the same range for five years despite excellent earnings.

- The errors of the past couple quarters are behind AMD and now that it has its quad core chips in mass production it can focus on cranking clock speeds and other improvements that will help it compete with Intel.

- Even though INTC can outspend AMD by practically any margin, AMD has some key partnerships that help offset its limited purse. R&D relationships with IBM and Sun could well bear fruit down the road particularly in the area of chip fundamentals (gate technology and the like).

- Despite the recent round of screw-ups, it's important to recognize how far AMD has come. Not that long ago AMD chips were only for desktop computers and were considered cheapo alternatives at that. Dell just announced a range of new servers based on quad-core Opteron chips. Sun selected AMD for its x86 server platform. The ATI merger will allow AMD to truly compete with NVIDA and Intel in the ever-more-important graphics arena.

In short - though AMD has erred egregiously, it is unlikely to head further south. There is reason to believe that it could regain its footing, and, if it does, the rise above $6 will translate into some healthy percentages.