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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Paul Engel who wrote (52811)	3/18/1999 9:05:00 AM
From: A. A. LaFountain III	Read Replies (5) \| Respond to of 1578884

Re: Some analyst this bozo is ! A couple of thoughts: 1) During my meeting with Fran Barton, he spent a not inconsiderable amount of time discussing the variable nature of the yields that had been experienced in the first part of the quarter. It would have been possible to infer that the mere mention of such aspects would qualify as a reason to suspect a greater loss than consensus for the first quarter; but 2) My investment thesis has never been predicated on the results of 1Q99, but on AMD's potential ability to leverage profits as it moves up the value chain with the K-6-III and the K-7. I didn't hear anything in my meeting that would lead me to believe that the potential contributions of those two parts over the next seven quarters has become impaired. Two other points worth mentioning: 1) For better or worse, I use a long-term earnings growth model as the basis of my recommendations. As I have a $40 12-month target for AMD, the potential gain (even from the point where I initiated my most recent Strong Buy as the stock tanked after the 4Q conference call) was above the 35% required for a Strong Buy recommendation. 2) This is a risk/reward business. I have believed that with the stock selling below $20, the risk/reward level was sufficiently attractive to protect against all but the most calamitous of events. To date, this appears to be true (note that even after the "significant loss" announcement, the stock was off only slightly more than the percentage decline suffered that day by most other s/c companies). We are each entitled to our opinions about risk/reward, and given the wide range of potential outcomes, I can't simply dismiss the bear case. If you are able to rule out the bull case, I am impressed with the strength of your convictions. However, it would appear to be adopt that posture is to dance with the null hypothesis, which is something I've always had trouble doing. One final thought - an understandable reaction to the events described in my column would be distaste at not being made privy to the announcement that was to follow a week later. In fact, my reaction was just the opposite - tremendous relief that information (which may or may not have been available to the CFO at that point) was NOT released on a discriminatory basis. The universal reaction to the news was yet another indication that no one was let in on these developments. This is as it should be, and as long as management avoids favoritism, they should be applauded. Investors on this thread, particularly, should welcome this type of behavior. - Tad LaFountain