Advanced Micro Devices

On Tuesday, Advanced Micro Devices (AMD) will report its earnings for the third-quarter. The Street estimate is for eight cents a share, but I can’t ever recall seeing such a wide range of forecasts for one stock. The high forecast is for 18 cents a share, and the low is for one penny a share. That’s a huge range, and it’s particularly interesting considering how widely-followed AMD is. Right now, 30 analysts have placed estimates on AMD’s earnings.
There are 28 estimates for next year’s earnings. The high is for 97 cents a share, the low is 35 cents a share, for an average of 64 cents a share.
Clearly, the conventional wisdom is the very fluid on AMD. That’s usually indicates that the stock is poorly valued. In fact, it probably helps explain why AMD has done so well recently. Last quarter, the company made three cents a share, compared with the Street’s estimate of a five cent loss. The quarter before that, AMD lost four cents a share compared with Wall Street’s forecast of a two cent gain.
I think AMD is a wildly over-praised company, but this earnings report—and Wall Street’s reaction—will be interesting to watch.

Posted by on October 8th, 2005 at 3:58 pm


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