Thursday, December 06, 2007

AMD stock hits 52 week low

AMD stock is now $ 8.91 due to an analyst lowering his rating. If they deliver a fantastic quarter as defined by some combination of the following:

1. Revenue grows faster than the market (without a significant inventory bloat)
2. ASPs flat to up.
3. Gross margins increase
4. Net loss decreases significantly to the region of 100 million $ (due to an improvement in business conditions and not just cost reductions).
5. The forecast improved momentum into Q108.
6. They gain market share from Intel (and not just from the other miniscule x86 players).

At which point the stock may return to around 10-11$. If not, the stock is heading south of $8 and toward 7 bucks. And Hector will be "monster.comming" his way out soon after.

Intel stock today is $27.22...close to it's 52 week high.


amdinvestor said...

At some point, you have to say that AMD has reached a bargain. The difficult part is, there are no hard earnings (only debt) to ground the fundamentals. Do you have suggestions on finding ways to price AMD?

I agree with your overall viewpoint, in the short term AMDs product lineup is lacklustre to what has been promised.

180 Sharikou said...

AMD today is $6.25 give or take a few cents. It's EPS is negative and there's no guarantee it will return to positive. In this situation how would I price them?

IMHO there are two things you must consider. Logic and the investment community. I depends a lot on your investment horizon. If your horizon is 1-2 quarters. Then I'd say don't buy. Simply cos the odds are stacked against them returning to profit and Wall St is in a panic with sub-prime, oil and potential recession worries.

If your horizon is at least 12 months, then I would be looking closely at their roadmap and compare it to Intel's. At 6 bucks they probably are a bargain. Even if they don't deliver significantly over 12 months, some clever charlie on Wall Street will talk the stock up. But chances are that the OEMs will give AMD some market share the instant they have a passable/competitve product. Which will happen at some time.

However, the big threat to AMD is with Intel building low cost silicon like Silverthorne, they have a weapon to attack AMD at the low end.

Nett - my prediction would be over a 6 month window should the economy go into recession, AMD heads further south. Should it not, AMD should bounce back to around 10 bucks. But any bounce back will not be due to strength in the fundamentals, it will be driven by market momentum.

Please note - do not buy or sell based on this comment. This is my personal perception and is not professional advice.

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