Tuesday, May 15, 2007

It boggles the mind - Part 1

Today I get to marvel at Wall Street and the investment community. Analyst Doug Freedman at ATR upgraded AMD from a "Sell" rating to "Buy" based on the fact that he thinks AMD instead of losing $2.56 per share in 2007 will now lose only $2.27.


The mind boggles at the insanity that prevails on Wall Street. The company is losing money. Essentially Mr. Freedman said instead of losing 1.2 billion $ they will lose about 900 million $s this year. Yes...LOSE!

First of all - If I were a client I'd fire him on the spot. Who in their right mind makes a buy recommendation on a company based on the fact that they will lose less money this year. At best, I can understand a "Hold" as he gets to see how Q2 and then the rest of the year starts to turn out. But knowing that he will be making another call in 2 months post the Q2 results, it's the act of sheer greed that drives this community that allows them to make recommendations like this.

Based on this news primarily (I'm assuming these guys are not stupid enough to drive up the price because they announced the Phenom brand name), the stock is up 4.5% as I write.

I told you a couple of days ago why Johnny Wall Street was eager to drive up the price. So they can artificially boost prices to tempt ordinary Joe's into the market and recover the losses they made buying AMD at 20$ +.

I mean really, they should make these guys back up the trades they are making with their clients money with their own too.

Well - what can I say. Imagine driving up the price of a business that's going to lose money. If it stinks like a dead fish - it probably is and I'd skip straight to desert.


Roborat, Ph. D. said...

Sometimes the value of a stock doesn't necessarily equates to its profitability for the year but more so by how much the market "percieves" its value.

You do have to make a buy recommendation if you think the market is being overly about AMD which could ignite a stock price increase once the market has better visibility.

Personally, I see more problems for AMD in the future. I do agree that a lot of investors persistantly holding on to the stock.

It would be funny to think that Doug Freeman made this announcement before Intel declare more price cuts, including Quad Cores middle of this year. Intel's assault continues.

Anonymous said...

Why does this surprise you?

I have no remorse for people who simply listen to this (or any other analyst's) opinion. If you don't know how to evaluate the stock (in terms of technicals, roadmap, ,management, etc),then you shouldn't be GAMBLING on sngle stocks and should be buying mutual funds.

I say gamble because that is what the average Joe is doing when they buy individual stocks as they generally have no clue on how to evaluate.

That said a stock's price is as much about trend and performance vs expectation vs absolute performance. A stock that loses less money than expected will generally increase in price (at least short term). Likewise a company that still has tremendous profits, but earns less than expectations will often drop in price.

I owned a small cap stock which was fundamentally sound from a technical performance - an aanlayst upgraded it to buy, it went up 20%. Two weeks later (with no news or new financial data) the same analyst downgraded the stock on the last day of the quarter (hmm...pump it up prior to end of quarter and sell off to meet quarterly results, maybe?), it fell ~15-20% and since has started creeping back up (~10%).

Point is the upgrade/downgrade are generally good for short term fluctuations - if the stock doesn't have the financials to support the upgrade or downgrade then this will only be a short term price blip... we'll see what happens in AMD's case, but I would not be buying it right now....

Anonymous said...

Big dump soon follows fake pump.

PENIX said...

I don't mind the falling stock price. It only means I will be able to afford more of it before it sky rockets after the release of Barcelona.

Anonymous said...

The market perceived AMD to be worth about 13.50 with all the bad news on the table. You can agree or disagree. Right now people are betting that they've seen the worst and that private equity may step in. There's no conspiracy, just people trying to get ahead of a curve that may lead right off a cliff.

Anonymous said...

"I don't mind the falling stock price. It only means I will be able to afford more of it before it sky rockets after the release of Barcelona."

Didn't you also think this when the stock was at 20? How about before Q1 earnings release?

It WILL NOT skyrocket after the release because BARCELONA WILL NOT IMPACT AMD's FINANCIAL UNTIL 2008. Now go ahead and call me a fanboy, but Hector himself stated this in an interview!

AMD's stock may go up in H2'07 but if it does it will be because of seasonal demand increases and perhap better cost strucuture (fro both layoffs and increased 65nm production).

Barcelona will be be <15% of AMD's revenues for Q4... people keep forgetting server is not all that much of AMD's revenue (<30%). Now couple that with the fact that AMD will not be averaging 50% server production on K10 in Q4 (at best they will hit this toward end of quarter) and you can now start to see that financial impact of K10 ("10h") will not be substantial in 2007!

lex said...

Of stocks and speculation..

This analysis is a monkey hoping to catch a rising tide and has no clue.

Where was he when the stock was 35 bucks calling for a sell on AMD? Where was he when the stock was at 12 bucks and change calling for a buy? The monkey missed a > 100 % drop and a 30% rise in the stock and NOW he is beating his chest. Its no wonder he is a analyst and not out making real money with his own money. I'll wager this monkey doesn't put his money where his mouth is.

It was a no brainer when the stock was at 25 bucks, at 28 bucks and for sure at 30+ bucks that AMD stock could go higher but for certainty would fall. It wasn't if or when. INTEL surely was going to react. INTEL with far deeper pockets, huge lead in silicon technology and manufacturing and equal design talent woudl respond and soundly out AMD AMD. With C2D they did that and more. It was AMD caught with their trouser at their ankles and their limp thing in their hand pumping like mad. Even after all that stroking still no Barcebalogna to be had anywhere. But surely as the sun will rise tomorrow Barcebalogna the "Phenom" will rise. It'll look "Phenom"anal for a bit. Then stock will spurt and Hector pumps as best he can. But AMD like Hector has no more shots left he is a single shoter. But soon that "Phenom"anal will look and more silly and the biggest joke of a name as soon as Nehalem. comes. But like Hector no amount of pumping longterm will rescue AMD. It is a classic rise, fall a lot, rise a little to tease, and fall alot. AMD will be below 10 buck in 2008 as they simply don't have the capacity, technology to compete agaist the current INTEL onslaught.

Tick Tock Tick Tock INTEL cleaning AMD's "Phenom"ANAL clock... LOL

Anonymous said...

To be clear though, dead fish don't stink unless they have sat around for a while. A visit to a good sushi restaurant (and comparison with take-out sushi that's been left on the dining table overnight) will tell you this.

Anonymous said...

What if the dessert was fish? If it were being served, it'd be dead, right?

JumpingJack said...

"Today I get to marvel at Wall Street and the investment community. Analyst Doug Freedman at ATR upgraded AMD from a "Sell" rating to "Buy" based on the fact that he thinks AMD instead of losing $2.56 per share in 2007 will now lose only $2.27."

Through Q2 AMD has lost 2.20, 1.11 in the first quarter, 1.09 in the second quarter. I have a funny feeling $2.56 was abit optimistic.