One of the first things you need to realize is that there really are only two computer processor companies out there, the much bigger Intel, and Advanced Micro Devices ( AMD ). These two companies have been engaged in a price war for quite some time now, well... some would say it seems more like Intel was trying to run AMD out of business. Intel even went as far as sacrificing its own bottom line and in turn it's own stock price.
During this period AMD purchased graphics card maker ATI . It took them quite some time to develop, but they are beginning to bundle the processors and graphics cards together. This should help give Advanced Micro Devices a much needed edge on Intel in the future. It is even already helping them to land contracts like this one just announced with Samsung .
Another reason to conceder owning the hated AMD , is the fact that they just got some fresh, green capital from Abu Dhabi to the tune of 622 million. A very nice chunk of change, to say the least. These foreign investors obviously see long term value in this company, which is certainly a good sign. Piling on have been recent downgrades that have punished this stock even further to it's 52 week low!
The question you need to ask yourself is, "Are people going to stop buying processors"? AMD cannot continue to go down forever, and with the addition of ATI's products, I think AMD can begin to turn things around back into the green. Sure, this stock pick is a lot like catching a falling knife , but in the long term AMD shareholders could be pleasantly surprised if they begin to build a position at this point.
Having a look at the chart though you will realize that this is obviously not for individuals with a pacemaker, especially in these market conditions, but things should eventually turn around. While I did a decent job in calling the bottoms in Vasco Data Securities VDSI , and Ceradyne CRDN , I feel this pick could be even more dangerous due to all the negative momentum. Don't even dream about putting it all in at once !
The markets have been nuts, but I believe they can only take so much before people around the world begin to take notice and begin bargain hunting... Hang tight though, this is the type of market that makes you feel like you are on the cruise ship that just started passing out the barf bags.
Original Source: http://stockpicky.blogspot.com/2008/01/is-there-any-reason-to...
$6.18 (01/08/08)
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