Replies to post #37633 on Advanced Micro Devices Inc (AMD)

[Tiger64]

What I meant to say is that AMD will be able to sell everything they can produce but if intel can offer larger quantities at still 95-98% of performance of AMD's processors they can still make a boatload of money too...I just don't see intel sweating bullets until 2006...this situation kind of reminds me of the wireless phone industry where they realized that if they undercut each other too much no one makes any money especially if there isn't a huge growth factor...

[Grimes]

bobs10, re ".the shorts are dead meat." Barring a major market meltdown, I think you are right. Some of the outstanding short interest may represent hedging activity by convertable bond holders - that aside shorting a stock (naked) which has the potential for explosive earnings, in particular one valued at low multiples of revenue relative to its peers makes little sense. I think shorting is a poor bet generally - someone once quipped "...there are no bears living in Fifth Avenue mansions..." - shorting this stock seems to offer a lot of risk with little reward.

[rupert]

My theory is that apart from the few who are hedging, the shorts are motivated almost entirely by AMD's historical volatility. They don't follow or understand the fundamentals. That is why they do not cover en masse when AMD has good fundamental news. Until good fundamentals translate into exceptionally good earnings, together with strong Buy recommendations from leading analysts and large upward price movements on heavy volume shorts will not cover. And when they do, they will wait for the next price plateau and short again.

In the end they loose when a stock surges strongly over a prolonged period to progressively higher plateaus.

Expecting shorts to give the stock a lift is a waste of time. Blow-out earnings is what we need. I still think we won't get the lift off from 14-18 until second half of September.