One of the hallmarks of a bear market is the the financially weak companies get their brains banged out. AMD (AMD) fits right in. Today it dropped to a new 52-week low of $4.75. The stock traded at over $40 in early 2006.
Over the last three years, the shares in rival Intel (INTC) are down about 20% and AMD is off closer to 80%. The chip sector has not bee kind to investors.
AMD is faced with a double threat. First, it is still having trouble competing with Intel, which is viewed as having better products and the ability to weather a price war due to its strong balance sheet. Perhaps as important, AMD has heavy debt load during a period when debt is anathema in the market.
All of the companies which supply components to PCs and servers are likely to be hurt if the recession cuts into computer sales. If the dry spell is a long one, AMD may not see the recovery.
Douglas A. McIntyre
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