Jamok, Re: I'm seriously thinking about liquidating 1/2 to all of my AMD position on Monday, at a very substantial loss, based on what appears to be a pretty dismal short-term picture, and a questionable long-term one.
I don't think that in the short-term the stock will rise (except maybe for a dead-cat bounce which would be a selling opportunity IMO). However, there's one big uncertainty, and that is next week's CC. AMD will be, I assume, very cautious with guidance. There's the possibility that they will guide for losses in Q3 but I don't expect that. Probably guidance will be something like "slightly higher revenues" and EPS about break-even based on the expected seasonal upturn in Q3.
That's probably also what is priced in in the stock right now, so I don't think it will substantially rise or fall on the news. So we have to look beyond guidance and especially look out for more clues about either AMD bombing prices (easy to determine, just look at Pricewatch and check Buggi's ASP tables) and roadmap slippage (e.g. Palomino further delayed). Especially the latter is cause for great concern IMO. I've heard that the 2 GHz P4 will be introduced on August, 26th and if AMD isn't able to at least reach 1.53 GHz this quarter, ASPs will fall further. If AMD delays Palomino beyond September, I'd immediately sell (and even short) the stock.
Also important is the Intel CC in two weeks (July, 17th). If they don't stick to their previous guidance (seasonal upturn for Q3 and Q4) and guide down, I expect all semiconductor stocks to drop further, independently from what they are forecasting. Intel is the bellwether stock for chips and what they say is IMO very important for the outlook of the whole industry. Also important is to see how good Intel did last quarter. If they fall behind estimates by more than a few percent and AMD clearly gained market-share against them, that would bode well for AMD's future. If Intel did okay and could maintain overall ASPs, AMD is in a world of hurt because Intel's strategy worked to lower prices where AMD can compete and get monopoly pricing for the rest of their products.
So, what should you to? I don't want to give investment advice but I'd like to give some general thoughts: Downside risk for AMD right now is IMO limited to either $20 (big support) or the $15 range. I would hold at least until the earnings CC and look for clues what really is going on (not what Jerry thinks, see above). Of course, there's the risk that AMD will guide for losses and the stock will drop further but I doubt that. After the CC I'd sell the stock on any bounce and wait for the Intel CC. It's IMO too risky to hold the stock until after the Intel CC because the news could be bleak. If Intel suffered from market-share losses but sticks to old guidance for a seasonal upturn and if AMD can execute their previous set roadmap, I'd probably buy back in.
Andreas |
