Wednesday, January 9, 2008

Happy New Year! How did we get here?

Where we last left this story back in November 2007, Intel had just launched its 45nm Penryn family processors (to very positive reviews), AMD released its Spider platform (to underwhelming reviews) as well as a flurry of bad news from push out of release dates of higher clocked Phenom and Barcelona parts, Bulldozer, and graphic technologies as well as fessing up to errata and other "execution challenges" at the Dec 13 2007 Financial Analyst Day.

I thought it would be interesting to plot a chart of Intel vs AMD stock price since the launch of Penryn on 11/12/2007 and 1/9/2008 (today).

Source: Google Finance

What a disaster! AMD's stock value has dropped 55.29% whereas Intel has dropped but only 9.53% during the same period! Let's remind ourselves about some events that have occurred since November 12 which may help explain the chart.

  • Most reviews of Penryn have been overwhelmingly positive.
  • Intel stock reached a 1 year high of $27.99 in December, 2007.
  • Barcelona and Phenom have not ramped to expectations. Numerous problems appear to be plaguing AMD with no apparent relief in sight.
  • SmartMoney/CNBC's Jim Cramer put Hector Ruiz on his " CEO Wall of Shame"
  • Private issuance to Mubadala Development Company of 49 Million newly minted AMD shares ($12.70 per share as of 11/15/2007), netting AMD $608 Million. As of January 10, 2008's market close, AMD's shares were worth $5.53 each, resulting in a 56.46% loss in value to Mubadala. Ouch!
  • AMD announced that its ATI acquisition would be impaired
  • The AMD December Financial Analyst Day did not seem to convince the sell-side analysts that AMD would get out of its rut soon. It didn't help that Hector Ruiz has torqued analysts with comments like "I don't know what kind of Kool-Aid some analysts drink" and "I don't give a damn about short-sighted analysts and investors."
  • The Consumer Electronics Show 2008 (CES) kicked off in Las Vegas
Nevermind other factors such as the subprime mortgage mess, fears of the "R" word, and a tech slowdown in 2008.

Of course, I could also throw in
  • Britney Spears was taken into Cedars on a "5150 hold" and lost custody of her children
but I won't go there...

Next week will turn out to be interesting. In addition to being the week of Macworld Conference & Expo, it is also Q4 2007 earnings reporting week for both Intel and AMD. By most accounts, Intel is expected to have a blowout quarter. Everyone expects AMD to report a loss but the big question is "how much?" The street will closely listen to the Q1 forward looking earnings guidance for a seasonal drop from Q1 or above seasonal which would bode well for Intel but could bode either way for AMD.