Another Bad Day for AMD

AMD is plunging to new multi-year lows today. Egg on my face, I added to my position recently, so I just managed to add to my losses.

With all the bad news in the PC industry I did not expect AMD to make its previous guidance, which was for an essentially sequentially flat Q3, when Q3 is typically the strongest quarter of the season.

Preliminary Q3 results were released today, with revenue down 10% sequentially and a $100 million inventory write off. Ouch. Considerably worse than I anticipated.

Can AMD survive? It is a fair question. I still like AMDs graphics and graphics-integrated APUs (advanced processing units). I still think that desktop PCs with big screens can do a lot of things that mobile devices can't do. I am looking to buy a larger screen and an APU-based computer myself, and I think having massive parallel processing on the CPU (graphics really is parallel processing) is going to open some new doors. I am waiting for Windows 8 to be released so I don't have to install Windows 7 and then upgrade (I'll also be installing Linux since I increasingly use opensource software that runs better on it).

Intel is well set up financially to survive a slump in PC demand, but then they own their own fabs. AMD is fabless, so they just tell their foundries they want to produce less chips. Obviously in Q3 they both produced too many chips and also could not sell some of their older chips, implying they produced too many chips as far back as Q4 2011.

Might as well hold onto my AMD stock and see what happens, at this price. I often take riskier stock positions than I would advise for conservative investors. I've done really well with ONXX and FNHC lately, so the AMD decline won't hurt me that much.

Disclaimer: I am long AMD.