Sometimes you can throw 10 heads in a row with a true coin.
But not often.
Actually, one time in 1,024 = 1/k
In your model
So the real question for me is which one:
my estimates -- arguable
a) Is well managed p(i) = 0.9 p(a) = .5
b) mfrg transition p(i) = 0.9 p(a) = .7
c) Markets well p(i) = 0.9; p(a) = .7
d) Is financially robust p(i) = 1.0 p(a) = .5
e) meets commitments p(i) = 1.0 p(a) = .5
Joint probability pi = 0.779 pa = 0.05875
These are calculated as independent events, of course, absurd.
It looks as if it is about 18 times as likely that
Intel will score as it is that AMD will score. This suggests
to me that the prices of the two stocks are badly out of
line. Intel should probably have a PE of 78 (maybe $275 and
AMD one of 6 (maybe $10) -- give or take a few percent.
Once again I have to suggest that AMD stockholders, which
by the wrath of God I am, should welcome a rescue of AMD by
Intel. Once Intel through vigorous competition (i.e. price
cutting) has driven AMD to the wall, it should be allow to
purchase the assets for a $1 billion or so (few firms would
take over the obligations of a semi company competing with
Intel. DOJ, of course, could not oppose the takeover unless
some other purchaser of distressed companies could be found.
DOJ might be able to require that AMD not be broken up or
the K-6-3 and K-7 lines preserved semi-independent of the
Intel systems. Intel could benefit the whole market by
allocating niches to each product line so customers would
have some variety of fast products within the x86 family.
But this would be unusual. Should Intel refuse, and no
other company bid, the remains of AMD would be valueless,
and the stockholders robbed of liquidation value.
AMD is almost exhausted of resources to continue
investment. Much of the pitiful earnings this quarter
are at least semi-fictitious and do not produce cash.
Debts must be paid and is junk. The next slump may very
well mean death for AMD. It needs a very rich partner.
There is only one available. |
