Staying away from Advanced Micro Devices (AMD)
04-10-07: While AMD’s stock has dropped to a level where it is getting hard to ignore (Trading at $13.27 per share as closed of 4/10/07); one might view this as an attractive price and be tempted to jump back in. We would like to caution you brave souls. Despite the recent decline of ADM, our position remains the same on AMD. AMD still has many problems to overcome. It is unlikely this stock will pay off in the foreseeable future. Stick with Intel (INTC). AMD is second rate at best.
Again..from our post back in January ‘07..
AMD reminds us of the Netscape vs. Microsoft fight back in late 1990s. As you might recall, both companies were fighting for the browser’s supremacy. Despite valiant efforts, Netscape would eventually fall; going up against a giant like MSFT proved too much. In the end, MSFT’s money and resources outlasted Netscape. Similar to AMD vs. Intel (INTC), we believed Intel will eventually win out. Last year was a great year for AMD as sales were strong, but once Intel decided to lower their prices, AMD started to tumble. Price was the one advantage AMD previously had over Intel. Personally, I know when I buy a new computer, the only reason I would consider buying an AMD system is because it was a few hundred dollars less than a comparable Intel machine. Even with the lower prices, consumers have hard time choosing between AMD and Intel because the Intel name is so strong. Now that price is no longer an advantage for AMD, Intel will have the advantage. Despite the fact that AMD chips have proven to be faster and more efficient, consumer will always choose the stronger brand, especially when price is not a factor. Unfortunately, for AMD’s stock, we see very little gain in the near term. In fact, it could drop further as the company attempts to fully integrate with Symbol. Despite the lucrative deals with Dell last year, we believed AMD is in for more hard times ahead. If you’re an AMD investor, we strongly recommend selling some positions whenever possible and perhaps putting it in Intel (INTC).
Comments
AMD processor seems to be always cheaper than intel on the same level of speed. AMD Athlon 64 were good to AMD. Now the big matchup will be in the core Quad processors.
Posted by: shraz | April 10, 2007 05:26 PM
It will be interesting to see if AMD can pick itself up. We've lost hope in AMD. We would rather stick with Intel as believed they will continue to dominate this sector in price and technology.
Posted by: ibooyah | April 10, 2007 07:43 PM
AMD won't die. If AMD dies, Intel becomes a monopoly and past evidence of Intel's monopolistic ways will surface.
Intel is much smarter than that.
Posted by: jack | April 10, 2007 10:26 PM
Interesting comment about Intel's past monopolistic ways. Could someone further expand upon it?
Posted by: Paul | April 11, 2007 12:27 PM
I read somewhere that R&D for intel was like 5 billion while AMD was 1B
Posted by: shraz | April 11, 2007 02:07 PM
AMD R&D budget is a fraction of what INTC spends. I found this article which kinda indicates the actual numbers:
"Intel’s R&D expenditures were $22.1 billion between 2001 and 2005, about $10 billion more than any other semiconductor company. Intel's R&D spending accounted for 26% of total R&D money spent by the top 25 IDMs that manufacture products and break out semiconductor financial results, along with research and development costs."
source: http://www.electronics.ca/presscenter/articles/373/1/RD-Spending-By-Semiconductor-Companies-Exceeds-30-Billion-Per-Year/Page1.html
Posted by: ibooyah | April 11, 2007 02:52 PM
i found the article
Intel is known for its heavy research-and-development spending even during lean times. In 2006, the company said it was eliminating 10,500 positions in a massive restructuring. But it still spent $5.9 billion on R&D -- about 17 percent of overall revenue -- up from $5.1 billion in fiscal 2005.
By comparison, AMD plowed $1.2 billion -- more than 21 percent of its revenue -- into R&D last year.
http://www.post-gazette.com/pg/07077/768857-96.stm
Posted by: shraz | April 11, 2007 03:07 PM
Nice find, Shraz. Thanks for your continued participation.
Posted by: ibooyah | April 11, 2007 03:13 PM
Monopolistic practices of Intel: The huge scandal at Dell getting covered up right now is one. Intel paid Dell to use their chips.
You can read about the very legitimate lawsuit that AMD has filed against Intel.
http://arstechnica.com/news.ars/post/20050628-5047.html
The Japenese government warned Intel about some of the practices, which AMD is suing Intel for.
But all of this DOESN'T MATTER to us as investors in Intel stock. We WANT a monopolist that isn't caught yet. Intel's shady business tactics make it a great investment.
Posted by: jack | April 11, 2007 08:15 PM