Advanced Micro Devices Inc (AMD)

[bobs10]

Still seems relevant, maybe even more so?

I especially like this part:

"Late in September 2000, Wall Street witnessed an unprecedented event. Over the three-day trading window between Thursday, September 21 and Tuesday, September 25, Intel Corporation’s share price fell 30% and erased over $120 billion worth of shareholder value. The stock failed to recover any substantial amount of this loss during the following months, and the event still ranks as the greatest and quickest evaporation of market value for any individual, publicly-traded company in the history of the stock market."

More and more people are going long AMD and short INTC. That's a big drop from $61.50 to today’s close of $23.83. INTC is worth 38% of that Sept 2k price, and what's worse it appears to be in a free fall lately. (As I remember it didn't INTC hit $75)? Anyway, either AMD is going to have to rise or INTC is going to have to fall some more, or some combination of the two before reality is reflected in the capitalization of both companies.

http://finance.yahoo.com/q/bc?t=2y&s=INTC&l=on&z=m&q=l&c=amd

Not a pretty INTC picture, but AMD looks pretty good. Maybe the market does know more than your giving it credit for? Anyway, I just happen to be in the camp that believes that INTC will survive, but not thrive over the next few years. Since I don't have any emotional baggage to carry around I'll go with the stock that looks like it will make the most money (hint it's not INTC).

One thing is for sure, with all those 65nm plants coming on line any slow down in demand, either because of macro conditions or competition from AMD, is going to be deadly. This is especially true since next year is when price will move closer to center stage and INTC's cost structure can't survive on low ASPs the way AMD can. INTC will need to go on a crash diet for that to happen. By the end of next year you should be seeing a lot of changes occurring at INTC. Those changes rather than any “maybe” products are what INTC will need to turn itself around. But that will be a slow arduous process.

The best INTC can hope for from the new products is design parity with AMD. Besides the fact that such a scenario is unlikely, that alone won't be enough in the New World that's about to dawn. The value of the INTC name like good Balsamic Vinegar has been greatly reduced. The days of carrying dead weights around are over, and profit centers had better be that. All in all I see a lot of problems at INTC. Too much fat and terrible management with a hurricane forming on the horizon. (I'll leave it to you to figure out what that hurricane is named).