The other day I called out a “tech analyst” for making a critical error when he plopped a sell recommendation on AMD. Those that follow such recommendations are now short by approximately $343 million as the stock is currently trading at over $37.
I have no idea about short term fluctuations of the stock market, nor do I care. I am more interested in long term planning as it relates to product development. My job is to ensure that Voodoo remains on the cutting edge when it comes to PC performance and design. We are a boutique company and so is Ferrari, and Lamborghini. Just because we don't buy 10 million processors a year does not mean we don't understand which technology is best. In fact, I would argue that we understand industry trends better than 99% of the companies in our space.
I am also an enthusiast of technology and I call it like I see it. Ultimately we want our customers to know that we build the best machines by using the best technologies - so we happen to choose AMD in our flagship systems.
Being that Voodoo is on the cutting edge of technology I can safely say that all short sellers should expect more of the same. Only you can decide when you have lost enough money before you have to cover your short.
I also don’t think AMD has any intention of stopping, and this year is going to be more wicked than last. Not to say that Intel is standing still, because they are clearly working to improve their business – but the bottom line is you can’t argue with the numbers, and I’m talking about numbers as it relates to smart buying decisions. Intel is definitely working hard to get back on the rails, but AMD is not standing still as some would like to assume.
I speak with analysts often, and the ones I speak with are those who do their research thoroughly. I find that the tech industry has a bad name since the days of the infamous "tech bubble". It’s a tough area to invest in because people are always told different stories and they never know what to believe. Therefore I might go out on a limb and suggest that certain tech analysts are to be avoided (I think I just did), and in order for people to truly understand the tech industry they should follow technology trends.
In the meantime, I had a chance to sit down with Henri Richard for an article that will be posted on www.dailytech.com sometime tomorrow. Henri is one of the top three senior executives at AMD running the show along with Dirk Meyer under Hector Ruiz. Henri is a self proclaimed tech geek, and an avid gamer. He has been a key part of AMD's unprecedented business transformation, set in motion by Hector Ruiz. Look forward to this question and answer tomorrow, it’s pretty interesting. It will certainly offer my customers and potential customers an insider perspective on AMD’s future plans. It may also offer the naysayer’s valuable incite into the future at AMD.
Here’s a nice little email I just received from someone:
Well, you were right all along! INTC and AMD reported earnings and it's clear that AMD is on a roll:
Financial Times
By Chris Nuttall in San Francisco
Thursday, January 19, 2006
Concerns this week about the PC industry turned in a day to perplexity over bellwether stock Intel (NASDAQ:INTC) . On Tuesday, the longtime leader in the microprocessor market missed its numbers, blaming in part falling demand for desktop computers. But on Wednesday, results from smaller rival Advanced Micro Devices (NYSE:AMD) beat analysts' wildest expectations.
"We have been surprised – blown away is more like it – by the extent of the company's gains," said Merrill Lynch, as AMD reported that fourth-quarter sales of its microprocessors grew 35 per cent over the previous quarter and earnings per share reached 45 cents – well ahead of consensus estimates of 25 cents.
2 blogger comments:
Not to any suprise you are correct again. This is exactly why we trust you and your business. :)
Unrelated, did you get your hands on the X1900 yet????
I had chatted with Rahul and he had mentioned that I should post a piece of correspondence here. So here it goes:
I just wanted to say good job on your blog piece about AMD. I too am in
agreement with you on AMD's place in the industry, and how some of these
analysts are really not taking a good look at the entire picture. I am
compiling information for a "AMD Today" article, but in the meantime I
did post this little number on my webpage:
http://www.penstarsys.com/#amd_q4
I think that it is actually quite funny to hear all of these analysts
talk about how Intel will rule the roost after Conroe and the gang come
to market. I just shake my head and think, "Yes, Conroe is going to be
a big stup up from Pentium M and a huge step up from Pentium 4, but many
many changes need to take place after the launch to prepare the industry
and partners for the new chips."
Especially on the server and notebook side, where product cycles are a
lot longer than that of the desktop (haha, of course I am preaching to
the choir on this one). Also, looking at a low level design approach,
yes it will be a 4 issue core... but that does not exactly make it 25%
faster off the bat than the Athlon 64 which is a three issue micro-op
core. As Paul Demone once said, "Da, three issue core is strong like
tractor!" There are many more things about an overall processor core
that will make or break it. I think it will be a great performer, but
there are still some bad things about it... like the FSB. The inability
to do synchrounous read/writes to main memory, as well as relying on a
memory controller that runs at chipset speed vs. processor speed is
another nasty bit of engineering.
I for one am very interested to see what low level changes AMD has done
to both its memory controller as well as the cache and processor core
with the DDR-2 based Athlon 64's we should start seeing soon. While I
am not expecting a night/day performance, I do think that AMD has done a
lot to polish this upcoming core and its infrastructure. Don't even get
me started on HyperTransport and its advantages over everything Intel
has. Heh, if Intel was introducing Conroe with an integrated memory
controller and CSI this July, then I would be comfortable with the idea
that Intel will reclaim the performance crown and AMD will hit some hard
times. But even so, AMD can attest to the issues in changing over the
infrastructure from a FSB to HT base.
-end email-
So yeah, just as Mark Twain so famously wrote, "The report of my death was an exageration". We can see the same thing with AMD and the recent set of downgrades we have seen based on what appears to be the strength of marketing from Intel vs. the actual products that AMD is delivering and their solid roadmap for the future. I believe Intel will come back with great parts, but they have to address those concerns about their underlying infrastructure before they will have a product that is as good as what AMD delivers. Ask any of the server guys how much they like AMD's glueless MP vs. Intel's shared FSB, and that is only the tip of the iceberg when it comes to the base system architecture AMD is evengelizing and what Intel is trying to prop up.
Anyway, always fun to read the stuff here.
Josh Walrath
Editor/Owner
PenStar Systems, LLC.
www.penstarsys.com
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