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Politics : Formerly About Advanced Micro Devices
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To: Maverick who wrote (31516)4/8/1998 6:07:00 PM
From: Petz  Read Replies (1) of 1580419
 
Two analysts with different views, why?
In post 31515: Edelstone said he raised his 1998 earnings estimates on AMD to a profit of $0.40 a share profit, up from break-even previously.

In post 31516: S&P equity analyst Megan Graham-Hackett lowered her 1998 earnings per share estimate for Advanced Micro Devices (NYSE: AMD - news) to a loss after the company reported a wider than expected first quarter loss.

Edelstone was at the conference call and asked the last question. He asked about the tax rate assumed for the tax credit. The answer given by AMD, according to my notes was, "We moderated the credit taken this quarter so that we don't get an inordinate tax rate in 2h'99."

First, Edelstone knew that if profits in second half were less than losses in first half, the tax rate would NOT be 'inordinate.' (In fact, it would be less than 38%, which is less than GAAP standard.) Next, he looked at the magnitude of the reduction in tax rate (38% vs 63% in 4Q'97) and he knew that this was a clue that AMD expected substantial overall profits for the year. (http://www.techstocks.com/~wsapi/investor/reply?s=credit+tax+amd&sreply=4002839) Very clever question and clever analyst, IMHO.

Megan Graham-Hackett, the S&P analyst who now expects a loss, OTOH, did not participate in the CC.

Petz
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