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Friday, January 18, 2008

AMD Q4:2007 Results

AMD beat revenue estimates slightly with slightly better margins, cost controls and a tax benefit leading to upside versus the consensus estimate. They guided Q1 revenue to normal seasonality which would be down 7%. Capex will be front-loaded for 2008 as AMD continues to ramp capacity.

Estimates are coming down slightly but this stock is seriously compressed. Intel has been performing very well and keeping AMD on the defensive. I would expect that perception to continue but I can’t tell you the stock is a sale here. They’re the number 2 player in the processor market and number 3 is very far behind. Ultimately, AMD is likely to wind up as part of a larger entity. There have been rumors of strategic investors circling the company. That said, Intel is so well capitalized and downright powerful that I don’t see AMD making any kind of big breakthroughs market-share wise. I don’t really have a strong opinion on the stock one way or the other. Under $6 I like it. At $9 I don’t.

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