Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: Joey Smith who wrote (33094)	6/5/1998 8:37:00 AM
From: Reginald Middleton	Read Replies (1) of 1572207

While AMD is meeting/exceeding X86 microprocessor targets, flash memory, programmable logic devices (PLD), and networking appearto be falling short of target. As a result, we now project 2Q98 EPS at $-0.28 (old: $-0.25), 1998 at $-0.50 (old:$-0.39), 1999 at $1.45 (old: $1.50) and 2000 unchanged. " From a historical perspective, the market does not respect the earnings of AMD. Earnings are not the most predctive measure of shareholder value anyway, but the market also discounts the value of AMD's gross cash flow, the reigning shareholder value proxy. For the last 40 quarters, AMD's fully diluted earnings per share correlated with its market value 7.26%, while its book value has a correlation to market value of 70.23%. I interpret this as the market discounting the ability of the future earnigs power of mgmt., and valuing AMD more on its traditional assets. Regardless of the validity of this assumption, it appears obvious from a 10 year historical perspective that earnings are far from what drives AMD share price.

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