Advanced Micro Devices Inc (AMD)

[bobs10]

Here's the NYSE short release dates:

http://www.nysedata.com/info/productDetail.asp?dpbid=7&dptid=7&page=5

AMD has been following the SOXX for the past 5 days

http://finance.yahoo.com/q/bc?s=^SOXX&t=5d&l=on&z=m&q=l&c=amd,INTC

In contrast to the last 3 months when it was leading it

http://finance.yahoo.com/q/bc?s=^SOXX&t=3m&l=on&z=m&q=l&c=amd,INTC

What I'm worried about is that at the present prices the q4 EPS won't match all these new investors expectations. It looks like the funds have been selling and the little guys have been buying which could lead to volatility.

What really has me worried though is that AMD might say something like

"Well we just bought this new 10 ton hydraulic press and we intend to test it repeatedly on INTC's balls in 05".

That is what has me really terrified.

As to what might cause such a forecast. Well, suppose DELL finally comes on or SUN systems take off, or Mirrored bit starts to take off, or mobile processors start showing up in a lot more products, or the demand for 3G phones is more than expected.

More likely, not one thing, but a few things in both the flash and processor world start taking off. With AMD's fixed cost structure it wouldn't take much more in volume to create much more in profits. Just having 90nm online should generate a lot more processor revenue and the huge increase in JV3 capacity that is going to happen in 05 isn't because no one wants AMD's flash.

Short term AMD does look pricey and I've started playing it again, but this is strictly short term. To me, long term, the risk of being out of the stock is much more than being in it, for the time being.

Of course all this falling $ stuff, the BOP issues, and the governments deficit are all things that could affect the economy. The good news is that the preponderance of AMD's sales are outside the U.S. which is probably in for a period of economic adjustment as the $ continues to lose its' status as the worlds preferred hard currency.

I do expect the Yuan to be revalued against a basket of currencies largely because the advantages of having it tied to the $ have mostly evaporated. The main reason is that oil is going to continue to get more expensive in $ terms and the Chinese are big and getting bigger, importers of oil.

Inflation is going to get worse, something the Fed realizes and is starting to take measures to combat. Things are going to get tougher in the U.S. for awhile while we get used to a less ebullient life style, but I wouldn't be betting that foreign countries will be withdrawing their investments in Treasury bills any time soon, they don't want to kill the golden goose. Of course if the $ drops off a cliff then a panic could happen, but that would be bad for everyone.

Over all I expect the administration to continue lying about the desire for a strong $ while continuing to cut the legs out from under it. We've probably got another 20 to 30% to go and these things usually over shoot so who knows how far down is.

I expect real estate to be one of the first and largest casualties of the adjustment. But then I’ve felt that real estate was over valued for at least the last 4 years. With real estate having become the investment of choice, it is ripe for a 2k type of adjustment as interest rates start to rise.