Monday, December 19, 2005

Why do you listen to Wall Street Analysts?

Cody Acree, an analyst at Stifel Nicolaus, cut his ratings on AMD, the reason?

Acree said AMD's downgrade isn't due to what he called 'any impending problem," but that investors are getting a better grasp of what are the No. 2 chipmaker's strengths.

"AMD has done an impressive job of changing its image from a value-choice, lower-end supplier, with little real threat to Intel, to a technology leader that is setting the performance bar for Intel to try to duplicate".

I don't get it. AMD is leading and more people get to know it. Isn't that great news given AMD's small percentage of market share and the 80% pie to eat?

Instead of spewing hot air in random direction like a headless fly, I suggest Mr. Cody Acree do some simple exercise of reasoning:

1) Is AMD brand and tech leadership getting more recognition in the enterprise market? (hint: 38% four way server market in Q3 05).

2) Is AMD getting more traction in consumer space? (Hint: 67.7% market of retail desktop and 31.5% notebook in Oct 2005)

3) Does INTEL have products in the next six months to compete against AMD?

4) How is AMD capacity going? Is FAB36 cranking? (hint: here)

5) Can AMD sell its products?

6) What will be the revenue and earnings numbers?

7) Finally, what will be the target price?

Looking at Cody Acree's track record, he had zero accuracy on AMD.

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