The Advakit profile image baller2

The Advakit

$1.51
6/02/08
$1,287,514.83

2
06/02/08
3.6%
28.8%
Send Message

Stock Pick by The Advakit

AMD: Amd Update

Start trading AMD with real money!

Rate Analysis
star star star star star
0 ratings
Posted 2159 days ago on 6/29/11

AMD will go UP
$10.00 on 12/29/11
$10.98 (59.36% from time of market call)

Once again guys I appreciate any feedback. Note: I wrote this a few months ago, but I added some updates. There has been quite a bit that has changed since I last did a study on Amd. Their former CEO Dirk Meyer is gone, right around the release of their first fusion apu, with the release of Llano [Edit: Llano out and receives good reviews] and Bulldozer a few months away. It seems only logical to start with the CEO issue. It seems that Dirk Meyer leaving had something to do with the lack of exposure or a visible entry into the mobile market. Keep in mind that years ago when Meyer entered and began restructuring the company that Amd sold their mobile graphics core Imageon to Qualcomm for 65 Million This may stem partially from that decision. Also, looking at Amd's roadmaps, there was no clear future where they would enter into the mobile market. But there was something key that I think really is the heart of this issue. I was reading on this and saw this quote by their chairman. "The board believes we have the opportunity to create increased shareholder value over time," http://www.msnbc.msn.com/id/41018477/ns/business-us_business/ With so many companies the stock price is so important that there is a lot of pressure put on CEOs to make decisions that will move the stock up. In fact it seems that the news was released right before the q4 earnings to help buffer the price loss. That short sighted method tends to cause problems when growing a company. When Meyer entered as CEO, the company was losing a tremendous amount of money while not really competing well in any of their businesses. Admittedly, when I saw the move I didn't like it either, as it was one of their profitable businesses in a growing sector. But competing in another area away from their core businesses meant R&D money being stretched even more thin, so from a business standpoint it was a tough but sound decision. There were also very positive results as I noted in my last study. Amd was moving towards black ( q4 profit) and had some quite formidable products being released this year. Even the zacate will be a possible mobile cpu after one or two generations, however I don't see how investment into mobile was a reasonable request for the company, even now. Even Intel hasn't been able to make an entry into the mobile sector with their x86 architecture, and it may be that Arm will continue to have a monopoly in that area for the future. It seems that this is more of frustration from people who don't understand how the business works that feel they missed a huge market. And Amd isn't the only ones as Intel just had a huge management loss in their mobile sector. There could be a second reason, and this is a decision to oust Meyers because he would agree to sell the company. But this may present some legal cross-licensing issues as well. I don't know whether Meyer was ousted or left on his own, but here are the ramifications of the choice. Now Amd's management once again is unstable as more exects left amid Meyers departure. I don't know at this point who you choose to be CEO. Insiders know that there will be tremendous pressure on that person to make entries into the mobile sector at the expense of competing with Intel in their core business. They'll also know that they are expendable. Hire someone from outside they may not understand the culture of Amd or the business, and if he is not an engineer that can cause additional problem as we already have seen with their last CEO. It really is a sham that the chair would create this situation amid a stronger Amd, especially since Amd has much better engineers than Intel. It has been several months since Meyer left and it seems they haven't found anyone to replace him[Update: They still have yet to name a CEO] (Also: http://online.wsj.com/article/SB10001424052748703791904576076241726827256.html) As far as the business is concerned, on the cpu side Amd has released Brazos, which has done extraordinarily well. In fact in an interview they said demand has surpassed supply. It is an overall much better platform that what Atom provides, providing more power while consuming less energy on a smaller die. Update. Llano has been reviewed, and once again it provides competition to some of Intel's mobile solutions, however no laptops have been released so pricing will be key. Bulldozer is on its way and if the other chips are any indication, it should give Intel much more competition. Bulldozed however is much more important because it will be the future architecture for all Amd's chips, including on the server side. On the GPU side, Amd continues to do extremely well, providing good competition to Nvidia. Their new architecture should start to compete with Nvidia (and now Intel with their Larrabee) in the gen computing space. No surprise from this department, as Ati has always been a good company. Where does this put Amd? It seems that Amd will be a better solution moving forward and should provide much more competition in their markets moving forward. They should be able to take marketshare in the notebook space. However, there still is the lingering problem of the popularity of other mobile platforms (i.e. phones, tablets) and right now nobody is sure how they will affect the sale of traditional computers. Many have said they will replace laptops, and of course desktop computers are in secular decline, but I doubt they will replace laptops yet as they don't provide an all round competitive alternative to them. But that may change soon. The Asus Eee pad may actually be a viable solution in the future, and from what it seems, it is having some success. However, I still don't believe tablet will become mainstream in the U.S. until they can provide almost everything laptops do both on hardware and software, which a ways away. Then there is the question that if Arm will be that solution moving forward. I'll say definitely for years in mobile phones, and most likely in tablets as long as they are seen as media consumption devices like the ipad, and not mobile computers. Really there is one key factor that will determine this to me, and that's Microsoft. Microsoft right now is the only x86 company that can make a tablets competitive, but they have to provide a competitive solution and it looks like they have that in Windows 8 (I'll be doing a study on them soon). As a stock this is what I see. I like Amd is a company, but I think right now there may just be more compelling answers in the technology space. Amd is doing much better, but they shot themselves in the foot by once again making management unstable after so much success. long term why invest in a company that has these kind of board issues when you have basically a monopoly in the mobile market in Arm, a very good blue chip in IBM with room to grow and a good dividend, the best company in the world in Apple, and a ton of smaller tech companies that could give much higher gains. More importantly, the popular narrative right now is mobile solutions, and to a degree rightly so, so it may be tough for companies like Amd and Intel to jump in price because they don't have their feet in that market yet. It may not matter how well either company does because they just are seen in an area that is in secular decline as silly as that sounds (Intel once again posted record profits). Amd has a quarter coming up and they will beat those estimates. In fact I'll say they may even beat the estimates by a reasonably large number. They'll also be riding more momentum into fall which is strong for tech and should have another two really good quarters. I see them going to 10 sometime before their 4th quarter, but that looks like a ceiling for them so unless they do extremely well I don't see them going far past that point. Longer term I have to hold to a wait and see until they sort out their management issues. Otherwise well done Amd.

Add a Comment

Comments

Posted 8/11/2011, 6:53 pm

@Mike
Yeah I know! I did these using another program and I don't know if when I copied it over here it either didn't transfer the spacing or the website doesn't allo such spacing. I messages uptown and will try again next time. Btw is it me or does uptown not really have interest in expanding the website any?

Posted 7/14/2011, 6:50 am

@ Jarrid Fetterley
Yea if you notice on tv how many times do you see an Amd commercial vs and Intel one? Amd's in an interesting position where they're competing with Intel but Intel has eyes on companies like Samsung and eventually becoming a fabrication company. They have made some branding changes, and some are pretty good ideas, but they really need more capital to make a major ad campaign. I think that would really help them since most people really don't know about Amd even though they have pretty good solutions.

Posted 7/5/2011, 10:22 am

i believe amd is building a major chip plant in upstate new york. the place is huge. main target is intel. i see momentum for this chip maker. they face a major issue in rebranding. intel has the premium face in the market.

Posted 6/29/2011, 8:51 pm

"AMD has Better Engineers" how do you know that? Intel has been shellacking AMD for a while . . . and AMD's stock price shows for that in my opinion. If AMD's Engineers are so superior surely they would have more market share and a better stock price? Or is it the same pretense when people make the same claim about German Engineering?

Posted 6/29/2011, 8:11 pm

My eyes! crit by wall of text! Spacing, paragraphs!

Displaying 1 - 5 of 5
Subscribe to Stock Analyses Comments feed:



Make a suggestion for this page