Joseph,
Breifing.com has this today:
ADVANCED MICRO DEVICES (AMD) 32 1/2. Not every one is Intel. After the close Wednesday, semiconductor company Advanced Micro Devices (AMD) reported a fourth quarter profit of $0.15 per share. That was up from the year-ago loss of $0.09 a share, but it was three cents less than what Wall Street was expecting. Oops. Tech stocks, including AMD, have rallied strongly and beating expectations is almost a necessity right now. Three cents short is a problem, no matter what the reason, and AMD has been down as much as 6 points in off-market trading. Revenues were about as expected, rising 28.6% from the year-ago period to $788.8 million, but margins were lower than expected. AMD is capturing an increasing share of the sub-$1000 PC market, and the company is optimistic about revenues going forward, they just aren't making as much money as hoped. The stock has surged from 12 3/4 in August, a 155% increase in just four months. This reflected considerable optimism on the profit outlook. In fact, with operating profits per share the past four quarters of -$0.39, -$0.45, $0.01, and now $0.15, AMD is on the right track. The stock may simply have gotten ahead of the company's prospects. The consensus forecast had been for AMD to earn $1.06 this year. That may have to be shaved some now, but even at $1 a share, AMD is trading at a lofty multiple for year-ahead earnings. DLJ has downgraded the stock this morning from "buy" to "market perform" and more firms may well follow suit. Business prospects for AMD remain good. But they are in a viciously competitive industry with constant pressure on margins. The stock price has recently reflected expectations that just about everything will go right. This quarter, it didn't, and the next several quarters might not be all that is hoped for either. Just because Intel is on a roll doesn't mean that every other technology company will be able to match their performance. AMD stock may take a while to get back on track.
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When will the market realize that AMD will NEVER be able to make much money because there isn't a niche that Intel won't fill and drive for maximum market share/profit? They will be allowed to make a small profit, and therefore to stay alive, but their strategy seems to me to be a complete dead end situation.
Barry |
