Scott, I guess it is proper etiquette to proclaim you interests and position upfront. I currently hold AMD puts, because I sense that currently AMD is overvalued.
I open my reasons for AMD's over valuation to anyone who would like to respond. Actually, I am quite interested in hearing any and all contrary arguments. The following are my thoughts:
1.) AMD stock has been hyped based on the K6, but in actuality the K6 cannot compete directly with PPro or PPro II. The arguments about performance don't have any substance in my opinion, as I watched (and profited) from Cyrix trying to compete the same way with the M1 and the Pentium. Performance is not enough to unseat Intel. You must have the performance and the perception that you are a technology leader, or else you are doomed to low or non-existent margins.
2.) AMD is much larger then Cyrix, and must sell enormous quantities of K6 processors to stay in the game. Unlike Cyrix, which can stay alive (lower fixed costs) on small volumes and selling through the "grass roots" channels, AMD MUST land large OEMs. This will prove to be a do or die problem for them.
3.) Intel is firmly in control of the game. I believe their costs are lower (per chip) and their relationships with OEMs will be very, very difficult to break.
(Remember, all those here, can make money from AMD's stock price falling, as well as it going up. Personally, I don't care which direction it goes, just as long as I can profit from it. My comments are not because I dislike the company, or any have any ill will towards AMD, just this is the way I read the climate for them.)
Any arguements, supporting or counter? |
