Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: Process Boy who wrote (65195)	7/14/1999 10:04:00 AM
From: A. A. LaFountain III	Read Replies (1) of 1578945

PB: re "Are you as critical of AMD's "guidance" as you are about Intel's? Care to tick off their track record the last 12 months?" Not really, or even the last 12 quarters. In my opinion, both companies have done a less than stellar job of dealing with the transition of the PC processor business to lower secular growth rates. But I continue to believe that what separates the investment nature of these two companies is that Intel will continue to have an increasingly difficult time living up to investors' growth expectations (I'm already having a devil of a time justifying my 19% long-term growth rate) and AMD offers an increased likelihood of a positive surprise. With the market caps at $225 billion and $2.5 billion, respectively, I fail to see how the futures of Intel and AMD are being appropriately reflected. It seems to me that both valuations are more representative of their pasts than their outlooks. AMD has 150 million shares outstanding. If 25 million MPUs throw off $20 of profit apiece, that's over $3 per share and the stock goes to $50. Now, $20 of net profit on ASPs of $70 is impossible. Take the ASPs up half an order of magnitude and it becomes plausible. Intel fans say that won't happen. Fine. My rating is predicated on the belief that such an outlook falls within the investment horizon by January, 2000. If so, then the stock will return enough to justify a Strong Buy over the prior 12 months at any point under $30 (and Yousef could then stuff his <ggg>s where the stepper don't shine). If not, well - I've had so many other recommendations pan out over the last year that I guess I'm just due for a regression to the mean (not that I'd be delighted for that to happen). - Tad LaFountain

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