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

To: Gopher Broke who wrote (220007)	12/11/2006 12:52:09 PM
From: neolib	Read Replies (2) \| Respond to of 275872

This is all old news so there must already be a lot of down-pressure factored into the stock price. But are things looking bleak enough that we can call the negativity a contrary indicator? Not IMO. There are still a number of significant positives which are helping support the stock: 1) Dell is buying a lot, 2) AMD is selling all it can make, 3) 65nm is out and about, 4) Quad core demo'ed. The problem is that Intel has finally reclaimed the performance crown, and further, seems to have laser focus on keeping it this time around with the financial resources to do so. It actually amazed me that little AMD on more or less a shoestring, was able to take the crown as well as they did with Opteron (and fortunately, it made me a nice pile of money :))). I am very careful now however, because I think 2007 is going to be very tough on AMD. I suspect we will see $15, if not worse (sub 10 is possible) much more likely than seeing $30. I love the stock for the price volatility and abundant news gossip. It must be played rather differently from buy and hold IMO.

To: Gopher Broke who wrote (220007)	12/11/2006 1:29:40 PM
From: jspeed	Read Replies (3) \| Respond to of 275872

I feel pretty strongly that AMD is near the bottom if not at the bottom. Compare AMD's fundamentals to the semiconductor industry, and it's a value buy (see below). Virtually all the pessimistic sentiment is focused on earnings and GMs. Most investors assume that AMD is going to continue to gain share to some degree. The big question is how much are they going to earn and how much are they going to be hurt by ATI in the near-medium term. In my mind, earnings upside based on 65nm production, a new product cycle, and increased graphics sales due to Vista are not priced in right now. I think sentiment is definitely way on the pessimistic side. Goldman putting AMD on the least favorite list and reiterating that today underscores the pessimism. It can get worse, but not much worse. If the world assumes that AMD is going to earn 1.00/share next year (which I think is the worst case sentiment scenario) AMD could go to $18. If sentiment goes to neutral AMD goes to $25. Valuation: The TTM (Trailing Twelve Month) Price/Earnings (P/E) ratio is 20.32. This ratio is lower than the average P/E for this Industry Group (Electr. Semi.) which is 55.63. The P/E of the S&P 500 is 19.03. The Price/Book Value ratio is 2.45. The average Price/ Book for this Industry Group (Electr. Semi.) is 2.56. The Price/Cash Flow ratio is 22.50. A low ratio shows a strong ability to generate cash and reflects well on a company’s stock price and liquidity. The average Price/Cash Flow ratio for this Industry Group (Electr. Semi.) is 41.17. The Price/TTM Sales ratio is 2.01. A stock with a low Price/Sales ratio indicates a stock is not overvalued. The Price/Sales ratio is significant since it is harder to manipulate sales than earnings. The Price/TTM Sales ratio for this Industry Group (Electr. Semi.) is 4.87. Profitability: The Return on Assets (ROA) is 6.83. A high ROA is a good profitability measure since it reflects the ability of management to produce profits from each dollar of company assets. The average ROA for this Industry Group (Electr. Semi.) is 4.95. The Operating Cash Flow was Positive in two of the last three years. The Return on Equity (ROE) is 13.51%. This ratio helps represent the future ability of a company to grow earnings. The average ROE for this Industry Group (Electr. Semi.) is 0.95%. Balance Sheet Strength: The Current Ratio is 2.06. Current ratios above 1 mean that a company’s shortterm debts are less than its assets. The higher the ratio, the stronger the company’s finances. The Long-Term Debt/Capital is 10.86%. This indication of financial leverage measures the extent of a firm’s capital that is provided by lenders. Below 25% reflects well on a company’s financial stability. The average LT Debt/Capital for this Industry Group (Electr. Semi.) is 10.94%. Growth Potential: The prior quarter Earnings Per Share (EPS) of $0.27 is greater than the EPS of the year over year quarter of $0.18. The TTM EPS growth rate of 836.36% is greater than the TTM Sales Per Share (SPS) growth rate of 8.32%. The EPS growth rate of 12.28% is greater than the expected next year EPS growth rate for S&P 500 of 9.69%. Earnings Trend is Positive for the last three quarters on a year over year basis.