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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: jamok99 who wrote (43346)	6/8/2001 11:38:15 AM
From: DRBES	Respond to of 275872

re: "it's haunting in terms of that the idea makes a fair amount of sense to me. I'd be interested in what others think, if you care to reply." For reasons that are far too intricate to go into in detail the report is extremely short sighted. If you care to review my thinking on the matter do click on DRBES and read some of my posts going back for some time. In sum: It is the preponderance of this kind of evaluation that has kept AMD ( and very possibly inteL, though I do not think so strongly in the case of inteL ) so low in price. It is at times like the one that we find ourselves, in retrospect, having overlooked the most obvious of opportunities. AMD is extremely cheap here. ( Though, obviously, I could be wrong. ) It is because so many ANALysts concur with this moron from "THE PRU" that the stock is so cheap and well could get cheaper. ( I well recognize that I could be the "moron" here; but, obviously I do not think so. ) By standards that I have observed over more than thirty years of investing ( speculating ) AMD continues to represent one of the most undervalued situations I have ever witnessed. If you follow my advice ( no guarantees ) I do hope that it works out for you ( and, obviously, for me ) . These are the times that try our souls... and they are often the times of the greatest opportunity. Good Luck! PATIENT Regards, DARBES

To: jamok99 who wrote (43346)	6/8/2001 11:46:30 AM
From: DRBES	Respond to of 275872

re: "lemmings follow the analysts." ANALlysts are lemmings, which paints a virtual mental cartoon with a circle of them with each of their respective noses plugged into a trailing portion of the anatomy of the "lemming" just ahead of it. Patient Regards, DARBES

To: jamok99 who wrote (43346)	6/8/2001 12:07:47 PM
From: Petz	Read Replies (1) \| Respond to of 275872

jamok99, The main weakness with Charles argument is that A) AMD is the low cost producer, and B) it has more cash than Intel, relative to its expenses. Because of this, a price war will not last more than a couple of quarters, if that long. Since the stock market discounts short term developments, the result of a price was is already factored into the stock price, and the prices may start rising at any moment. Point A is proved by the fact that Intel's ASP last quarter was about $180 and they achieved a profit margin of 13.6%. AMD, with an ASP of $91 achieved a profit margin of 15.7%. (Both figures are net income before taxes.) This basic fact means that any price war initiated from Intel will 1)result in quarterly losses for Intel before it does for AMD, and 2)will not be successful in maintaining or growing market share. Rationally, it does not make sense for Intel to lower prices. If Intel acts irrationally, that's where point B comes into play. I'm not going to rehash the numbers here, but Intel's cash position, buttressed by an extremely large accounts payable position, is less than AMD's when adjusted for the size of their expenses. Of course Intel's cash is larger, but its NOT 6 times larger than AMD, the revenue ratio of the two companies. Even, adjusted for AMD's LT debt, which does not have to be paid for XX years, AMD is ahead. Point B limits the amount of time Intel can suicidally lower prices, if they choose to be irrational. Yes there are other industries that don't have this short term potential price war scenario in front of them. Unfortunately, the market is already assuming only good news from these industries. The only way to make money in the stock market is to know something that the rest of the market does not yet recognize and is likely to recognize within the next year. As long as 1)points A and B remain valid and 2)most of the world does NOT accept them, AMD remains a good investment. (2) will not reverse until the stock price goes higher. (1) could reverse if and when AMD's roadmap stops being competitive. Petz If INTC has better technology, AMD loses on performance, so INTC does well on pricing and AMD lags behind. In either scenario, INTC holds the trump card - the upshot is that given the dynamics involved, this sector just isn't the place to be, as other places have clearer winning possibilities. Despite the fact that I'm VERY long AMD and slightly long INTC, it's haunting in terms of that the idea makes a fair amount of sense to me.

To: jamok99 who wrote (43346)	6/8/2001 1:24:29 PM
From: Charles R	Respond to of 275872

<I do have a thought that I'd be interested in others' feedback on: A couple of days ago, someone on the thread (can't recall who - Charles R?) made what is basically the following argument: There isn't a whole lot of upside to AMD for the following reasons - If AMD has superior technology, INTC will fight like hell to protect market share by putting unbearable pressure on prices, so that both AMD and INTC lose, but INTC would be willing to do that to prevent further market share erosion. If INTC has better technology, AMD loses on performance, so INTC does well on pricing and AMD lags behind. In either scenario, INTC holds the trump card - the upshot is that given the dynamics involved, this sector just isn't the place to be, as other places have clearer winning possibilities. Despite the fact that I'm VERY long AMD and slightly long INTC, it's haunting in terms of that the idea makes a fair amount of sense to me. I'd be interested in what others think, if you care to reply.> That is a flawed argument and it definitely wasn't me. I am basing my current investments on AMD not going anywhere for the next year or two (unless we see some good business penetration). I think Intel will fare much poorly in the same time period. If you listened to Intel's conference call yesterday, you would have noticed that Intel's core business is basically where it was in 1997. It is going to be a while before the numbers justify the valuation. I ain't going anywhere near that one for the time being.