AMD stock analysis for 2009

[petevsdrm]

Hey guys I read this on my stock website and I thought I would toss it over here since I see lots of talk on the subject.

For those who don't want to read the wall of text, they are recommending a buy.

It wasn't a happy December for 600 AMD (NYSE: AMD) employees. Instead of a Christmas bonus, they got a pink slip and a severance package. That's 100 more than the 500 cuts the company originally expected to make.

Don't cry for the unemployed, though: AMD expects to record $34 million in cash costs related to severance payments and continued benefits this quarter. That works out to some $57,000 per lopped-off head and a pretty soft landing in hard times. And 600 out of 16,420 staffers (as of December 2007) works out to about a 3.7% workforce reduction. That's fairly drastic, but still far short of the rumored 10% cutback brewing at Microsoft (Nasdaq: MSFT) or a similar-sized plan under way at Electronic Arts (Nasdaq: ERTS).

AMD's stepped-up layoffs may be bad news for employees, but they’re a good sign for investors. This shows that management has the intestinal fortitude to make tough moves when needed, as well as the opportunistic eye to ferret out cost savings in new places.

The company probably will fall far short of its projected guidance for the current quarter, especially since the layoffs and some new goodwill and investment writedowns laid a few extra stones on that burden. But the Shanghai chips are shipping in volume through big-name server vendors like Sun Microsystems (Nasdaq: JAVA) and IBM (Nasdaq: IBM). AMD's ATI graphics cards are currently beating arch-rival NVIDIA (Nasdaq: NVDA) in a number of performance measures, and next year, we'll see the first true fruits of the ATI acquisition with new lines of highly integrated system platforms.

All of this adds up to a strong position in each of AMD's core markets. It won't kill NVIDIA or Intel (Nasdaq: INTC) by a long shot, but all AMD really needs to do is to perform once again the way it did three or four years ago. The stock price spent a lot of time in the $20 range before Intel put price-war moves on its smaller rival; after that, it even briefly touched $40 per share. Today, AMD looks poised to return to profits, and to world-beating stock market performance to boot.

Worst-case scenario? Nope, I don't see a bankruptcy or liquidation, even if the long line of creditors come looking for early payoffs. Much more likely is an acquisition at a hefty premium to today's prices, probably at the hands of Big Blue or perhaps Sun. Win or lose, I believe AMD will still beat the market next year.

EDIT:
http://www.fool.com/
This is the stock site, they have some fairly insightful articles from time to time that you can read even with no subscription.

 

[xx12amanxx]

Ehh ive known this for awhile ive bought a **** load of AMD stock for right around 2$ a share and i plan on making a good amount of money from it.

 

[pete3867]

hey xx12aman
how does one aquire shares , I mean where do you go about buying them?

 

[Malovane]

You set up an account with E-Trade, Ameritrade, or any other stock purchasing service.

And yeah... AMD is a huge bargain right now. Picked up 10k shares at around $1.90, and may pick up some more relatively soon. It's still cheap in the $2.40 range. Stock is expected by quite a few to be a 10X to 15X bagger over the next 12-24 months. There's some other great picks out there in other sectors as well. Yay for stock market crashes.

 

[petevsdrm]

There's some other great picks out there in other sectors as well. Yay for stock market crashes.

LOL
Yay from those who are just buying the first stocks in their portfolio, Boo from those who were fully vested in mid 2007. Fortunately I had just started my portfolio in 2008 so I have been buying on the way down. I am still at a net loss of around 11%, (S&P 500 is at over 30% loss for 2008) but I've got high hopes for 2009!

 

[turpit]

One analyst prediction does not a future secure. Here are some analysis which say the opposite for AMD:

From Dec 31 2008
Two Techs To Avoid In 2009 (AMD, AAPL)

California-based chip maker AMD has fought a good fight against larger rival Intel (Nasdaq:INTC). It's done a commendable job building a brand name and developing competitive technology; however, it faces several huge challenges in 2009 that won't be so easy to overcome.



Wall Street is expecting AMD to generate a load of red ink in 2009. The current expectation is for a loss of $1.03 per share. Frankly, I think that some may look at that, and then look at Intel, which is currently expected to be in the black, and the end result is that Intel will win the popularity contest. (For more on analyst expectations, read Analysts Forecasts Spell Disaster For Some Stocks.)

This one old, but interesting...from January of 2008.
http://www.247wallst.com/2008/01/the-large-us-co.html

AMD (AMD) is the second largest provider of chips and processors for servers and PC's. Its larger rival, Intel (INTC), has over three-quarters of the market. A price war has hurt AMD's gross margins badly. The firm also bought graphic chip company ATI and now has over $5 billion in debt. Shares were over $40 less than two years ago and now trade at a little over $8. For AMD to hope to compete, it needs a larger owner with a wider global chip business and better balance sheet. Intel has close to $13 billion in cash and short-term investments and 20% operating income margins on nearly $40 billion in revenue. Where would AMD fit? Somewhere with chip R&D expertise, a broad line of semiconductors, and a mammoth global customer base. Look for Taiwan Semiconductor (TSM) or Samsung to court AMD's board.

Well, they got this one wrong....sorta...it wasnt Samsung...it was Mubadala...who woulda guessed?


Kass: 20 Surprises for 2009

8. Capital spending disappoints further. Despite an improving economy, large-scale capital spending projects continue to be delayed in favor of maintenance spending. Technology shares continue to lag badly, and Advanced Micro Devices (AMD Quote - Cramer on AMD - Stock Picks) files bankruptcy.

(And this guy is predicting the economy to heal faster than other analysts...in mid 2009!)

And this from Barrons, in contradiction of another of their analysts "10 bagger" advisements.

Plunging Profits and Stock Prices of Zero

-- Some familiar names are not going to get out of 2009 in one piece. Already, some companies seem to be teetering on the edge of the precipice. It may take a cash infusion from the German government to keep DRAM maker Qimonda (QI1) from going bankrupt; Taiwan's government is going to intervene to keep its own memory companies alive. Charter Communications (CHTR2), the debt-ridden Paul Allen cable operator, has opened talks with holders of its $21 billion in debt in hopes of recapitalizing the company; equity holders could get wiped out. Nortel (NT3) recently hired bankruptcy lawyers. The aforementioned Misek last week picked up coverage of Palm (PALM4) with a Sell rating and a price target of zero. The list of companies in peril is long: Advanced Micro Devices' (AMD5) planned turnaround is going to be an uphill struggle in a world of shrinking PC demand. Can Motorola (MOT6) ever fix its handset business? Can Sirius XM (SIRI7) survive without restructuring? There are so many troubled tech companies. In fact...

Heres a rather harsh financial accessment

When The Chips Are Down, Chipmakers Resort To Other Means

One quick look at the chart of chipmaker AMD is all you need to see to understand how badly things are going.

The AMD shows AMD has $1.34 billion in cash on hand ($2.2 a share) which means the company is trading for close to cash on hand. However, AMD has $5.23 billion in debt and is burning cash at the current rate of $127 million per quarter per its Third Quarter 2008 Statement.

Oh what the heck...here another "prediction" tho this guy is a wackjob

Predictions For 2009

AMD will file for bankruptcy protection.

Kinda short and without anything to back it.





Heres one of several predicting layoffs at Intel

Analyst predicts deep job cuts at Intel

SAN FRANCISCO (AP) - Intel Corp. could be preparing to lay off as much as 10 percent of its work force and cut its fourth-quarter guidance for the second time, an analyst said Friday, because the economic crisis has caused computer makers to sharply curtail the amount of processors they buy for those machines

And in other news,
RUSSIAN ANALYST PREDICTS DECLINE AND BREAKUP OF USA

A leading Russian political analyst has said the economic turmoil in the United States has confirmed his long-held view that the country is heading for collapse, and will divide into separate parts

 

[Malovane]

Not that I would mind the last one... but really if we did have a total economic collapse, no investments are really good.. except maybe a gun and a couple tons of canned food.

 

[jj463rd]

For the past 10 years I have converted my backyard into a victory garden growing food (vegetables and fruits) because I feared that such hard times could come upon us all.No, I can't grow a years worth of food but still it provides me with several hundred pounds of food (a few months).
Having a 12 guage shotgun,lots of ammo and indeed stocking up on tons of canned food or nonperishable food is a great idea.I myself avoided getting into any debt.
The fear is hordes of very desperate hungry and unemployed people with anarchy and crime.

 

[fazers_on_stun]

^ Hopefully you don't live next-door to AMD headquarters - I doubt you could pick off 600 rampaging ex-employees even with a shotgun

/jk

 

[petevsdrm]

Wow, so one could say that a lot of folks see red in AMD's future. Well, I don't own any AMD stock, but I thought of Tom's when I read that article above so I shared it.

FWIW I hope AMD does return to profitability, just to keep up the competition.

 

[xx12amanxx]

Wow, so one could say that a lot of folks see red in AMD's future. Well, I don't own any AMD stock, but I thought of Tom's when I read that article above so I shared it.

FWIW I hope AMD does return to profitability, just to keep up the competition.

Oh they will it may not be now or even in a couple month's but they will turn a profit! My prediction's are that when phenom 2 get's released that will be the turn around! Stock's will start to rise with the release of the AM3 and ddr3 phenom's.

Watch i bet ya.

 

[jj463rd]

^ Hopefully you don't live next-door to AMD headquarters - I doubt you could pick off 600 rampaging ex-employees even with a shotgun

/jk

Well I do know how to convert a semi auto rifle into fully automatic in less than a few minutes (Just requires a drill,nylon cord and a small pulley).Heck I can fire a semi-auto rifle in fully auto mode without any mods (It's an easy shooting trick).
There is a good possibility that Phenom II may end up as AMD's last CPU at least lets hope that it's good so we can miss them.

 

[roofus]

it will probably be a rough year for them AND Intel but that doesn't translate to going out of business.

 

[fazers_on_stun]

Well I do know how to convert a semi auto rifle into fully automatic in less than a few minutes (Just requires a drill,nylon cord and a small pulley).Heck I can fire a semi-auto rifle in fully auto mode without any mods (It's an easy shooting trick)..

As a veteran viewer of many action flicks, I'm always amazed at the high degree of coordination displayed by the bad guys. They always attack singly or in pairs no faster than what the good guy can dispose of them - very considerate on the bad guys' part!

Take the movie "300" for example - it was only at the very end that the Spartans had to huddle together because the 100,000 baddies were in front and in back of them. And we all know they lost that battle .

 

[fugben]

How do you fire a semi auto rifle fully automatic without any mods?

 

[jj463rd]

How do you fire a semi auto rifle fully automatic without any mods?

It's easy although it can't be done with a low power semi auto .22 rifle.
Just place the butt stock of the rifle on ones stomach,charge the semi-auto rifle with the charging handle and pull the trigger with one finger.The recoil will cause the rifle to go back against one's stomach,another round will be chambered and the rifle will move forward causing the trigger to push against one's finger firing another round quickly.
It's just a simple shooting trick but it can unload rounds as fast as a illegally modified rifle.
I wouldn't recommend anyone doing anything illegal.
In the case of anarchy though no laws apply.

 

[RogT]

LOL
Yay from those who are just buying the first stocks in their portfolio, Boo from those who were fully vested in mid 2007. Fortunately I had just started my portfolio in 2008 so I have been buying on the way down. I am still at a net loss of around 11%, (S&P 500 is at over 30% loss for 2008) but I've got high hopes for 2009!



Hummmm..
That seems pretty odd to me...The range for 2008 was roughly $8.50 to $1.60...So if you were buying during 2008 how can you say you only have an 11% loss...This could only happen if you bot it during partS of the LAST 6 WEEKS OF 2008. By the way AMD is doun abt 82% vs that 30% drop in S&P.
Gor those that still insist its a great buy, congratulations on todays earnings report..

 

[fazers_on_stun]

LOL
Yay from those who are just buying the first stocks in their portfolio, Boo from those who were fully vested in mid 2007. Fortunately I had just started my portfolio in 2008 so I have been buying on the way down. I am still at a net loss of around 11%, (S&P 500 is at over 30% loss for 2008) but I've got high hopes for 2009!



Hummmm..
That seems pretty odd to me...The range for 2008 was roughly $8.50 to $1.60...So if you were buying during 2008 how can you say you only have an 11% loss...This could only happen if you bot it during partS of the LAST 6 WEEKS OF 2008. By the way AMD is doun abt 82% vs that 30% drop in S&P.
Gor those that still insist its a great buy, congratulations on todays earnings report..

It's dropped by about 4% in after-hours trading. We'll have to see what the institutional investors think tomorrow during normal trading, esp. with the lousy Q1 guidance (down 13% from the just-released Q4 revenue figures). Might be good to sell at 9:30AM when the market opens .