Today after the bell, Intel's only major competitor AMD reported disappointing earnings, missing by a large mark. This confirms what I discussed in the recent report released to newsletter subscribers. The spin by Wall Street and the media lists AMD's business transition as the source of the earnings miss, but this simply is not true.
You will note Intel's mention of a strong business demand in Asia after reporting its blockbuster earnings last week. Well, are you aware that AMD does most of its business in Asia?
Once again, Intel's stellar earnings report should by no means be taken to represent the early stages of an economic turnaround. At best, we will see the effects of trillions of dollars of debt being pumped into the economy. But as you can imagine, this illusion will not last long.
Intel has been trying to shut AMD out of business for well over a decade, using numerous illegal tactics. It's been a rolloercoaster ride for AMD. At times, analysts have predicted the end to this scrapy player.
I do not know what AMD's fate will be but I would say the risk of severe business difficulties is fairy high for long-term investors. One thing to keep in mind is that, going forward things are going to be diffferent for everyone - there's no bubble economy (except the debt bubble) - AMD could face its final death blow in a few years. I have always been a fan of AMD (but only for seasonal trading; not asa buy-and-hold). But based on what I see for the future of the global economy, AMD may use up its last life in a few years.
For those who are willing to take a sizable amount of risk, AMD might soon represent a nice short-term trade. They key is timing as always. The next couple of days should give you an idea where the momentum is headed. And of course, you also have to be aware of the market risk.
By the time the newsletter is released in a few days, I'll have better handle on what the stock will do in the short-term. I'll try to address AMD, INTC and DELL in this issue, along with others mentioned in the past, and perhaps a some newbies.
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Copyright © 2009. Mike Stathis. All Rights Reserved.
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