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No. of Recommendations: 8
I shall list them in point form.

- The bulk of the bear argument centers around AMD's poor track record. Clearly AMD's entire history through 1999 was pathetic. However, is it not a Foolish principle that past history is of VERY limited use in choosing stocks?

- Size DOES matter, and AMD definitely has a disadvantage here, but size can work against a company. I believe that IBM fizzled partly BECAUSE of its size. All of the size related arguments made apply even more to 1980's IBM.

- AMD's R&D budget is NOT being skimped on. The reason why the spending shows down by 7% is that the spending on the new Fab30 has been recategorized from R&D into production. AMD has filed more patents than Intel in the last year.

- Intel's R&D spending is not just on microprocessors. Intel is moving into internet connectivity products with great zeal. Further, the IA64 strategy requires significantly more research money to bring to product than the x86-64 strategy. BTW: I predict that IA64 will fail because of competition with the Alpha and other existing 64-bit processors. The Alpha is already established and will likely outperform the Itanium by the time it launches. Why build new software around an unproven Itanium when you can get better preformance on a proven design. If IA64 wins, it will only be because if Intel's clout.

- This IS the first time that AMD has had a technological lead over Intel. The K6 line was an underperformer (especially on floating point), and was never able to keep up on clock speed. Until the Athlon, AMD was only able to compete on price.

- Intel cannot just spend a few billion dollars, and regain a technical lead. Technology takes time AND money to develop. Intel got caught napping on IA32 while they threw everything at IA64. Even with their extra money, it will take at least a couple of years (if ever) for them to regain a technical lead. Early indications (though unreliable) show that the Pentium 4 will not be an Athlon killer.

- Neither the bull nor bear arguments made any mention of the current price, P/E ratios or anything like that. Analysts on both companies project ~20% growth over the next 5 years. Intel has a P/E of 56. 2000 year-end projections give a P/E of 38. The current AMD P/E is 29, with a 2000 year-end projection of 12! Does it not seem like AMD has much more headroom on their stock price?

Am I starting to sound like a shareholder?

One final note: AMD has said that they are on track to double unit shipments of processors this quarter. Rumored insider information suggests that they will more than double. However, the analyst consensus estimate for earnings growth is less than 2%. Even if margins are drastically dropped, it seems unlikely (to say the least) that double unit shipments will result in only 2% earnings increase. Is AMD way out to lunch on its estimates?
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