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AMD Loses Half Market Value in 6 Mos., Investors Pessimistic

By - Source: Google Finance | B 74 comments

Rumors that AMD may be acquired by Qualcomm have lifted AMD's stock for a few days, but the company's shares have tumbled and there appears a persistent pessimistic sentiment about the firm's future.

AMD stock was trading in the neighborhood of $4.10 on Thursday, which is down from $8.25 in March of this year. The market cap of AMD has settled below $3 billion, the lowest since August 2009. The stock traded as high as $46 during the height of the dotcom boom and $40 in 2006, when the company was challenging Intel's processor dominance with its Opteron and Athlon X2 CPUs.

While AMD was able to recover in 2002 and 2009, there are signs that AMD may be stuck in the $4 segment for awhile. According to investment research firm Schaeffer's, almost 15 percent of current AMD stock investments are betting on a declining stock value over time. The firm noted that current trading indicate a bearish sentiment "for the long haul" and recent aggressive investments bet that the stock will drop even below $3 with a profitability target for short interest investments of $2.84 by January 2013.

So far, this is just speculation. However, there is no denying that AMD's board and investor base will grow increasingly nervous if the stock continues to slide. On the day CEO Rory Read was hired, AMD's stock stood at $6.49, and at $8.83 when his predecessor Dirk Meyer was let go. AMD's stock has always been rocked by sharp ups and downs and Meyer had to deal with prices as low as $1.82 in November 2008, but Read's hiring appeared to be focused exactly at avoiding those sharp declines.

The recent downward trend began in April 2010 and AMD's new executive management needs an effective plan to inject more confidence in the company again. Otherwise, the recently launched transition toward a much more consumer-oriented company could come to a sudden stop and AMD may turn into a bargain acquisition target for increasingly powerful ARM SoC designers.

 

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  • 35 Hide
    geekapproved , August 16, 2012 6:46 PM
    You Intel fans better hope AMD succeeds, or you'll be paying $1000 for mainstream cpu's like you used to.
  • 24 Hide
    dudewitbow , August 16, 2012 6:41 PM
    spartanmk2Good news for Nvidia?

    their gpu business isn't failing, its the cpu business. too many delays on the release on their cpus(trinity was supposed to be may, opening up in october is an example)
  • 23 Hide
    proxy711 , August 16, 2012 6:34 PM
    Ouch that's not good news. I'm not sure what they expected though after claiming they can't keep up with intel and they wont get into a race with them anymore.

    Just because everyone knows that you're getting your ass handed to you by intel doesn't mean you can outright say so. Never show weakness.
Other Comments
  • 23 Hide
    proxy711 , August 16, 2012 6:34 PM
    Ouch that's not good news. I'm not sure what they expected though after claiming they can't keep up with intel and they wont get into a race with them anymore.

    Just because everyone knows that you're getting your ass handed to you by intel doesn't mean you can outright say so. Never show weakness.
  • 24 Hide
    dudewitbow , August 16, 2012 6:41 PM
    spartanmk2Good news for Nvidia?

    their gpu business isn't failing, its the cpu business. too many delays on the release on their cpus(trinity was supposed to be may, opening up in october is an example)
  • 35 Hide
    geekapproved , August 16, 2012 6:46 PM
    You Intel fans better hope AMD succeeds, or you'll be paying $1000 for mainstream cpu's like you used to.
  • 0 Hide
    A Bad Day , August 16, 2012 6:56 PM
    dudewitbowtheir gpu business isn't failing, its the cpu business. too many delays on the release on their cpus(trinity was supposed to be may, opening up in october is an example)


    And if AMD fails, they might spin-off their GPU department to save it. Or it gets purchased by Intel or ARM.
  • 16 Hide
    Onus , August 16, 2012 6:57 PM
    I'd be inclined to go long AMD. No, I'm not a fan, but I don't see them dying. A return to profitability could occur based on any aspect of their plans, not limited to mainstream CPUs. This actually has me thinking about opening an eTrade account.
  • -1 Hide
    NightLight , August 16, 2012 6:59 PM
    geekapprovedYou Intel fans better hope AMD succeeds, or you'll be paying $1000 for mainstream cpu's like you used to.


    altough i agree that it would hurt de consumer that someone has a monopoly,
    see how fast their sales would decline if they try to pull that off in this day and age...
  • 8 Hide
    busuan , August 16, 2012 7:07 PM
    To save the future of true parallel computing, AMD has to save itself first. AMD MUST make its case with Apple, as I see Apple the only company could implement and execute AMD's ambitious ideas. Heterogenous computing is essentially what Apple is now moving toward. And it is obvious that APU is inherently for iMac and Mac mini which demand decent GPU capability as well as power efficiency. With some fine tuning, APU could make its way into MacBook Pro, even MacBook Air.
    I love AMD's APU approach. But everyone has to get bread and butter first.
  • 9 Hide
    damianrobertjones , August 16, 2012 7:08 PM
    I have one question:

    Where are the AMD Windows 8 tablets? We've already had quite good units with the Acer W500 and MSI 110w but they were Windows 7 devices. Come on AMD! Talk about being left behind.
  • 0 Hide
    wiyosaya , August 16, 2012 7:09 PM
    IMHO, if AMD drastically improves their CPU offerings and gets them at least on par with Intel, then they will rebound as that would greatly broaden their current market.

    As I see it, the BD fiasco was a serious black eye for them.
  • 1 Hide
    A Bad Day , August 16, 2012 7:10 PM
    NightLightaltough i agree that it would hurt de consumer that someone has a monopoly, see how fast their sales would decline if they try to pull that off in this day and age...


    Indian salt tax. You can either take the high priced stuff, or do without it.
  • 8 Hide
    amuffin , August 16, 2012 7:12 PM
    geekapprovedYou Intel fans better hope AMD succeeds, or you'll be paying $1000 for mainstream cpu's like you used to.

    You used to pay $1000 for an AMD cpu too!
  • 0 Hide
    Anonymous , August 16, 2012 7:25 PM
    It was their purchasing ATI for cash that killed them. Sure, couldn't have been a merger, had to be a buyout cause it would be better for the shareholders. It was crazy, and what killed AMD, that had to cut cut cut to stay one step ahead of doom. They new Intel was releasing a new chip they had been working on and they just dug their grave. It was going to be a dogfight and they just threw out so much talent, sold off their fabs, and slit their throat for "shareholder value". I still don't see how they are going to make it, maybe ATI video card business will be picked up but most everything else doesn't have much value.

    Lesson, don't have a CFO become a CEO, may seem like a good idea on paper but one has to see the bigger picture.
  • 6 Hide
    ashinms , August 16, 2012 7:27 PM
    amuffinYou used to pay $1000 for an AMD cpu too!

    Exactly, that is why we need balance in the market, not monopolistic dominance.
  • 2 Hide
    schnitter , August 16, 2012 7:29 PM
    It's tough for AMD to keep up with all the patents Intel own. Its tough for AMD and it sucks for us consumers who have to pay whatever Intel wishes if AMD can't find a way to push forward.
  • 3 Hide
    chomlee , August 16, 2012 7:47 PM
    Over the last 4 years, I bought quite a bit of AMD stock in hoping that the fusion processor would pay off. It is a shame that the A6 and A8 never really caught on especially in the laptop environment where light computing and light gaming is perfect for the fusion chips. For heavy computing, the i3 and i5 blow away their counterparts but try any kind of gaming on those laptops.

    Anyhow, it is a shame and I am kicking myself for not getting out when the stock was $9-10 per share. I did trade some for Nvidia stock a while ago but that was only a small amount.
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