Ted-
I understand that Sanders said this quarter will be flat. Given that, why should the stock move up next week? AMD stock has already been richly rewarded for Q4 results, even considering the earnings. AMD has a very high target to hit now, one of the disadvantages of a blockbuster earnings number.
A key ratio is the stock price vis-a-vis its earnings. Investors when deciding whether to get into a stock, look at its forward P/E. AMD's is 18.5, a bargain compared to the S&P's 28 and Intel's 38. That coupled with its 24% YOY increase in revs makes it a strong buy.
All biases aside, it seems to me that AMD had an almost perfect Q4 and Intel had a ton of problems and still had a pretty good report. Which company has the most room for improvement over the next 3-6 months? IMO that company is Intel.
If you are talking stock price, AMD has the most room to grow. Intel is very pricey given its revenue growth rate. I have said this before with tech stocks, rev growth is as important as earnings growth. The rationale behind this thinking is that a company can always improve earnings by tweaking its margins or selling investments like Intel did this last quarter but rev growth depends almost solely on the market appeal of the company's product.
Certainly, if the market wants to reward AMD for past performance rather than future improvement, the stock should go up next week. So far, however, the market has chosen not to. AMD may be about to learn that blowout numbers can be a two-edged sword if there is skepticism that they can be repeated and improved on.
I am fairly certain that the market will reward AMD handsomely for its turnaround success just like it has done with IBM, AAPL, ADPT, ESST, MRVC and many others.....if not this week or the week after or then the week after that.
My take on the market's reaction to earnings was that it was more politics than anything else. But ultimately success sells on the street.
ted
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