Note that I think there are several knowledgeable pro-INTC posters here, as well. Historically the success of both companies development (architecture and process) drives their financial success. My position is that I tend to want to try to understand where things will be in 6-18 months, but I'm not sure that this is such a technical issue.
The truth is, at this point, I can't see a lot of value in being long either right now. AMD might have some value short term if there is a process and technology recovery on the way, but several years ago I made the call that AMD was substantial enough in technology and market share that if INTC decided that the way forward was to nuke them that they ran the risk of destroying the entire marketplace through commoditization (is that a real word?).
Coming from a manufacturing background (albeit aerospace) I feel like I have a pretty good grasp on the accounting and business models because I left the engineering side several years ago and am on the dark (business) side. What it looks like to me is a situation where both companies have fallen into the trap that high fixed cost manufacturing businesses run into, which is they have to fill the factories (or in the airlines cases, the airplanes). The choice for AMD is to lose more money or less. They think that they lose less by making more dice, and more if the factories sit idle. This is because they're selling above their marginal costs.
INTC is in the same situation, except that they have more to lose because of their larger size and larger overhead pool (Imagine INTC with only 65% of the market, what does that organization look like?). This is why their stock has underperformed for the last 4 years, a little squeeze goes a long way for them. Now they're fighting back hard and AMD is on the brink of a capital crisis. So the only question is, can AMD sustain the pain? Financially it's hard to imagine where the capital comes from. If a willing suitor were to buy AMD, it could be ugly for INTC.
Since there is not much price premium available to either company for higher performance in the bulk of their markets, they will have to learn to live with lower margins. The big question, then, is, which stock can do well in this lower margin future? Are they both bad investment ideas? Is there one that I can make money in short term?
>> Mostly I find those interesting that I believe to be technically knowledgeable.
Well, then no wonder the thread content lately is a disappointment to you. The folks who forecasted AMD stock price drop are more interested in the company's financial performance than in the details of AMD's technology that are not related to financial performance.
And the folks who didn't expect AMD's stock price drop seem to be very knowledgeable about AMD's technology details.
Of course, since this is an investment board, my list of "the more intelligent posters" is likely to be exclusively different from yours. I also think that the rate of adoption of 64-bit software is very much higher in your profession than in the general population of PC users. |
