A few days ago I had written part 1 of this post about how Doug Freedman at American Technology Research (ATR) had made a buy rating on AMD as a result of his belief that AMD will now lose a little less money than he had earlier anticipated. I then heaved into the credibility of the Wall Street hacks. I thought I'd have a look at Mr Freedman's track record to make my point:
January 12th, 2007 - - Mr Freedman releases a report headlined...
Advanced Micro Devices, Inc. ($20.18, Buy)
(AMD: We Think the Bottom is Near; Street Numbers Likely Move Close to Our Preview)
Investment Opinion: Maintain Buy rating as opportunity presents itself; we are active buyers at $18.
His EPS projection for FY07 is +77 cents (down from +80 cents) and his 1Q07 forecast is +10 cents (down from +11 cents).
January 24th, 2007 - Mr Freedman next releases the following report...
Advanced Micro Devices, Inc. ($17.51, Sell)
(AMD: Extreme ASP Erosion Leads to Disappointing Gross Margin Results and Outlook)
Investment Opinion: We are downgrading from Buy to Sell and reducing our price target from $27 to $12
His EPS projection for FY07 is now 7 cents (down from 77 cents) and his 1Q07 forecast is -22 cents (down from 10 cents).
His opening para in that report would have got most regular people fired but I guess Wall Street has different rules:
"We have clearly been wrong over-weighting the fundamental market conditions and have missed the bold fact that both sides are simply growing units at the expense of ASPs."
(Which is hogwash considering Intel's ASPs rose in Q406 and are holding stable still.)
April 9th, 2007 - in his next report Mr Freedman now proclaims...
Advanced Micro Devices, Inc. ($12.86, Sell)
(AMD: Is This A Sign We Hit Bottom? We Wish It Was - But Still Need Cash)
Investment Opinion: We maintain our Sell rating and $12 price target as the
company still needs cash to compete.
His EPS projection for FY07 is now -83 cents (he has removed his previous numbers from this report) and his 1Q07 forecast is -34 cents (previous number removed).
April 16th, 2007 - here we go...
Advanced Micro Devices, Inc. ($13.57, Sell)
(AMD: Pre-announcement Leads to Numbers Cut; Reinforces Need for Cash)
Investment Opinion: We maintain our Sell rating and $12 price target as the
company still needs cash to compete.
His EPS projection for FY07 is now -$1.82 (down from -83 cents) and his 1Q07 forecast is -82 cents (down from -34 cents).
April 20th, 2007 - he now says...
Advanced Micro Devices, Inc. ($14.28, Sell)
(AMD: "Something of a Perfect Storm" Hits AMD Results)
Investment Opinion: We maintain our Sell rating and $12 price target as the company faces an uphill battle against a revitalized 45nm wielding Intel.
His EPS projection for FY07 is now -$2.41 (down from -$1.82) and 1Q07 comes in at -$1.01 (against his final forecase of -82 cents).
May 14th, 2007 - we finally come to the report which started my tirade...
Advanced Micro Devices, Inc. ($14.68, Buy)
(AMD: Upgrading to Buy from Sell, Time for a Tradable Rally)
Investment Opinion: Upgrading to Buy from Sell and increasing our price target
to $18
His EPS projection for FY07 is now -$2.27 (up from -$2.56) and 2Q07 forecast is -73 cents (up from -89 cents).
So back to my rant. How on earth does anyone buy on the predictions of these analysts??? The same guy has gone from a Buy at $20 to a sell all the way down to $13 and has catalysed a short term uplift for the stock by creating a Buy rating at $14.68. His EPS estimates have consistently been off. His ratings are just whacked. From a Buy at $20.18 going to a Sell all the way down to $12.86 and becoming a Buy at $14.68. I thought you were supposed to buy low and sell high. Someone needs to inform Mr Freedman that his job is give his clients the info to do this.
Now I know you can't always get it right. But come on...this is the job for which Mr Wall Street gets paid millions of $s. And the basis for the last recommendation to buy till $18 just amazes me. As far as I'm concerned, these guys are mostly a bunch of quacks or simply duping average Joe's who blindly follow the recommendations of the so called Pundits of Wall Street.
Showing posts with label Sharikou 180. Show all posts
Showing posts with label Sharikou 180. Show all posts
Tuesday, May 22, 2007
Tuesday, May 08, 2007
Silverthorne - Intel's silver bullet
Check out this article on Businessweek.
Both the analysts and the press are failing to realise the true value of Silverthorne. A SOC that's as powerful as today's computers at a fraction of the size and power consumption but most importantly ridiculously cheap to manufacture. At 2500 chips per wafer which is roughly 10x today's CPU's, Intel is basically able to manufacture Silverthorne at 1/10th the cost of say a Conroe CPU today. I know this is a gross over-simplification but I'm just approximating here to set the context. Let's assume a Conroe CPU costs anywhere between 50-80$ to manufacture. Hence, Silverthorne could end up costing as little as 5-8$ to manufacture. So even if Intel sells the part at 30-40$, that's a really sweet profit and some awesome gross margin.
Now think about all the places you could put a small, low power, high performance IA CPU:
- Ultra mobile PC's
- MIDs - the new devices Intel is touting.
- Consoles
- Handheld gaming devices
- Education devices for developing countries.
- Cheap PC's or laptops for emerging markets.
Man...the possibilities are phenomenal. Now consider the tremendous pricing advantage Intel will have. No matter how much AMD cuts prices, they can't win if Intel has a part where they turn a hefty profit even if they sell at AMD's cost price.
What Intel is creating here is the Toyota Corolla of the CPU market. Affordable, reliable, reasonable performance and fantastic value for money. They finally figured out that's it's not enough to trim headcount and operating expenses to bring down costs. They must have a true low cost part and not keep down-selling their best technology by reducing cache or removing features and selling it as a Celeron. The low end of the market is a reality and to win it, you must build the right products and brands for it.
If the analysts thought Otellini was only referring to re-structuring when he was talking about profits growing faster than revenues at the analysts meeting last week, they missed the point completely. Silverthorne if handled right will bring awesome profits even if it doesn't grow revenue at the same proportionate rate as the traditional CPU biz.
Hector and team instead of borrowing money and still shooting for 30% market share should be reducing costs and trimming headcount. They are too far behind Intel in terms of products for where the market is going. Barcelona will not save them this year as it will really begin to impact the financials next year...and Penryn is looking pretty good too. Intel is flanking them from all sides - product, manufacturing, cost and just plain old managing the business.
Expect AMD to lose another 500 million or so in the next two quarters.
Both the analysts and the press are failing to realise the true value of Silverthorne. A SOC that's as powerful as today's computers at a fraction of the size and power consumption but most importantly ridiculously cheap to manufacture. At 2500 chips per wafer which is roughly 10x today's CPU's, Intel is basically able to manufacture Silverthorne at 1/10th the cost of say a Conroe CPU today. I know this is a gross over-simplification but I'm just approximating here to set the context. Let's assume a Conroe CPU costs anywhere between 50-80$ to manufacture. Hence, Silverthorne could end up costing as little as 5-8$ to manufacture. So even if Intel sells the part at 30-40$, that's a really sweet profit and some awesome gross margin.
Now think about all the places you could put a small, low power, high performance IA CPU:
- Ultra mobile PC's
- MIDs - the new devices Intel is touting.
- Consoles
- Handheld gaming devices
- Education devices for developing countries.
- Cheap PC's or laptops for emerging markets.
Man...the possibilities are phenomenal. Now consider the tremendous pricing advantage Intel will have. No matter how much AMD cuts prices, they can't win if Intel has a part where they turn a hefty profit even if they sell at AMD's cost price.
What Intel is creating here is the Toyota Corolla of the CPU market. Affordable, reliable, reasonable performance and fantastic value for money. They finally figured out that's it's not enough to trim headcount and operating expenses to bring down costs. They must have a true low cost part and not keep down-selling their best technology by reducing cache or removing features and selling it as a Celeron. The low end of the market is a reality and to win it, you must build the right products and brands for it.
If the analysts thought Otellini was only referring to re-structuring when he was talking about profits growing faster than revenues at the analysts meeting last week, they missed the point completely. Silverthorne if handled right will bring awesome profits even if it doesn't grow revenue at the same proportionate rate as the traditional CPU biz.
Hector and team instead of borrowing money and still shooting for 30% market share should be reducing costs and trimming headcount. They are too far behind Intel in terms of products for where the market is going. Barcelona will not save them this year as it will really begin to impact the financials next year...and Penryn is looking pretty good too. Intel is flanking them from all sides - product, manufacturing, cost and just plain old managing the business.
Expect AMD to lose another 500 million or so in the next two quarters.
Monday, January 29, 2007
AMD is toast - Penryn to give Barcelona a run for it's money
In spite of the micro-architecture being a year older than Barcelona, Core on 45nm is going to give AMD a hard time. I'm sceptical that Barcelona will sweep every benchmark. Intel is really pulling out all the technology stops in the last 6 months. I think Penryn will make the performance/watt playing field level between AMD & Intel and when Nehalem comes out in 2008 AMD is toast.
http://www.anandtech.com/cpuchipsets/showdoc.aspx?i=2915&p=1
http://enthusiast.hardocp.com/article.html?art=MTI2OCwxLCxoZW50aHVzaWFzdA==
I am now predicting lay offs at AMD within the next 6 months as well the high probability that the New York fab commission decision will be pushed to 2008 as AMD struggles to manage their cash & debt and continues to see their quarterly profits decline.
http://www.anandtech.com/cpuchipsets/showdoc.aspx?i=2915&p=1
http://enthusiast.hardocp.com/article.html?art=MTI2OCwxLCxoZW50aHVzaWFzdA==
I am now predicting lay offs at AMD within the next 6 months as well the high probability that the New York fab commission decision will be pushed to 2008 as AMD struggles to manage their cash & debt and continues to see their quarterly profits decline.
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