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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 232.55-3.3%3:16 PM EST
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To: andreas_wonisch who wrote (18861)11/13/2000 2:14:29 PM
From: GoutamRead Replies (2) of 275872
 
Andreas,

re: < Both stocks trade at unusual low P/Es currently and unless they can't meet guidance in Q4 .

AMD is definitely selling at a very low PE even with strong fundamentals. On the other hand - Intel's PE is still way high with respect to current market conditions.

Let's look at their Q3'00 EPS - which was reported to be 41 cents. Take away about 11 cents nonoperations eps from the eps reported by Intel - which comes to about 30 cents/share. Intel's PE based on annualized Q3'00 operations derived eps comes out to be about 31, which is high in todays market.

You may wonder why I took away 11 cents nonoperations related eps. Intel was able to convince analysts to include about 7cents from gains in its regular income. Because of the deteriorating market, this decision is fast turning into a big blunder for Intel, and is going to aid AMD immensely in AMD's PE appreciation by Q2'01.

Intel's capital gains party is going to come to an end prematurely - by Q2'01. Part of aggressive capacity expansion as well as aggressive transition to 0.13 microns was based on huge capital gains that Intel was expecting every quarter. I predict that Intel's eps is going to go down in Q2'01. Any aggressive ramp of P4 will make it even worse!

goutama

note: I don't own any Intel shares or any derivatives of investments related to Intel.
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