There is much speculation on SI and elsewhere about how long this downturn will last and when is the best time to buy stocks. FWIW, many CEO's in corporate America are optimistic in that this downturn will not last long; by optimistic I mean that have recently seen many large share repurchases. VSEA is not mentioned in this article, but they are a competitor to AMAT and recently did a share repurchase of around 6.5%. If they truly believed there would be Blood int he Streets, they would be hoarding cash, not spending it on their stock.
Brian
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Morningstar.com
Advanced Micro Devices Plans $300 Million Buyback
By Odyll Santos
A computer chipmaker and a consumer goods manufacturer were two of several large companies announcing buybacks last week. Advanced Micro Devices (NYSE: AMD - news), maker of the Athlon chip, plans to repurchase nearly 7% of its outstanding stock, worth about $300 million. Fortune Brands (NYSE: FO - news), which makes products ranging from liquor to office supplies and athletic products, wants to repurchase 5 million shares, about 3% of the total outstanding.
AMD shares fared better than those of many other tech firms in the sell-off of 2000. The company's stock fell less than 5%, compared to rival Intel's (Nasdaq: INTC - news) 27% loss and even bigger declines among other stocks in the sector. This year, with tech bouncing back, AMD stock has jumped more than 85% so far.
In January, AMD reported fourth-quarter earnings of $0.53 a share, below Wall Street estimates but within the $0.50-$0.60 range it gave when it issued a profit warning in early December. Like many other chipmakers, AMD has been affected by weak computer demand, and its dependence on the consumer-desktop market hasn't helped.
But AMD's prospects remain good because of its improved product positioning compared to Intel, said Morningstar.com's Jeremy Lopez. He noted that its products do very well against Intel's in both the performance and value consumer-desktop market. The weak economy will continue to be a challenge, and AMD expects first-quarter sales to be flat compared with the fourth quarter. Still, that's much better than Intel, which expects a decline in sales.
Meanwhile, Fortune, which makes well-known products like Jim Beam bourbon and Moen faucets, has seen its shares gain more than 8% this year after losing about 6% in 2000.
Analyst Todd Bernier notes in a recent analysis that Fortune's stock has performed miserably in the past five years, with an annual return 16 percentage points below that of the S&P 500 index. In addition, return on equity has dropped steadily despite a substantial decline in the number of shares outstanding.
With the economic slowdown, Fortune may face some troubles. Its home- products division, which delivers about a third of revenue, could be hit particularly hard as housing starts drop and consumers spend less on remodeling. In addition, Fortune may face some challenges, as companies like Callaway Golf (NYSE: ELY - news) and Nike (NYSE: NKE - news) introduce new products to compete with Fortune's top brands.
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