Can AMD Be Believed? (AMD)(INTC)
Not too long ago, AMD said that it would get 40% of the server market, taking a huge chunk of share from Intel Recent IDC and Gartner surveys don’t show that happending.
Now, AMD says it will grow at twice the industry average next year. That means it will have to beat Intel like a red-headed mule. AMD currently has 23% of the computer processor market.
The problem with AMD’s forecast, which sent its shares up almost 12% to $22.50, is that Intel is out with dual-core and quad-core chips which have been reviewed as being every bit as good as AMD’s, if not better. Also, AMD’s gross margins have been falling and could be as low as 50% next year. Onviously price competition is taking its toll.
If AMD is being overly optimistic, there will be hell to pay.
Perhaps the company should talk big once they are a little further into 2007. That way, it might disappoint fewer people.
Douglas A. McIntyre can be reached at email@example.com. He does not own securities in companies that he writes about.