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Politics : Formerly About Advanced Micro Devices
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To: Brian Hutcheson who wrote (3337)11/27/1996 10:09:00 AM
From: Stewart Elliot   of 1581463
 
RE: So if you can predict the earnings for a company in AMDs position 12 months down the road ,you are as much of a dreamer as most of these "expert analysts" . Most analysts look at earnings growth just as you are doing , the really sharp ones such as John Neff use price/sales and market capitalisation relative to other companies to guage the value of a company's stock .

I haven't suggested that I can predict earnings at all, but I did want to see if we can target a PE range. Of course, applying an earnings range is also quite useful in such an analysis. This may give an indication of the near term upside potential of AMD - and at what price the company's "value play" becomes less clear and predictable. Many successful investors use PE as an important piece of their analysis. I hardly think that such investors are somehow relegated to an inferior status to Mr. Neff.

AMD does not have the investment credibility of Intel. I believe that investors in AMD who are looking at Intel as an indication of what type of price/sales level is achievable may be in for a surprise. AMD is several years away from reaching this level of investment acceptance (Here come the flames). However, the reason we are in this stock is because it potentially represents an excellent value at current prices. Future PE and earnings can help determine at what levels we should reconsider the "excellent value" label.

As I've stated in previous posts, momentum investors may not care about such issues. And if AMD becomes a momentum play, then we will all be quite happy, financially better off, while throwing technical analysis out the window.
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