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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: cellhigh who wrote (7609)	4/22/1998 8:55:00 PM
From: Bill Wexler	Read Replies (1) \| Respond to of 18691

Sorry Ron, I think my understanding of the semiconductor industry is quite extensive. It had better be since I have a large portion of my net worth tied up in Intel. Short and simple: AMD is not a scam company nor is there anything wrong with the K6. However there is something very wrong with their business. Even though they are aggressively targeting the sub-1000 PC market (which is growing rapidly) investors are neglecting the fact that the margins will be nearly non-existent (as evidenced by the huge decline in gross margins over the past three years) and that performance expectations will still be high - even for cheaper computers. Therefore AMD is stuck in a vicious cycle of higher costs for fabs, and much higher SG&A while their product gets more and more commodified. AMD's last earnings report combined with their credit rating cut (which will increase their interest expense) and their over-optimistic expansion plans should have sent the stock to the floor. You can thank a manic bull market with plenty of speculative froth for the still-lively stock price. It won't last. By the way, I stand by my assertion that you are probably a net loser in the stock market.