Ruthless trader

Bought 1 block of TSO at 73.36

 

Sold at 74.20

 

Bought 2 blocks of eBAY at 27.61 and wrote 200 July 27.50 calls for 1.40/contract

 

Bought 1 block of TSO at 72.72

 

Sold 72.95

 

Bought 1 block of AMD at 22.71

 

Sold at 23.23

 

Sold 5 blocks of ORCL at 14.91, and bought back 500 July 15 calls at .25/contract. Net gain was .25/cents per share on 50,000 shares.

 

Yesterday's warning issued by AMD is evidence of INTC's price war!
In the June quarter, checks point to factual data that Intel has been gaining in the desktop and notebook segments, owed to aggressive pricing incentives. As a result, analysts from Bank of America and UBS speculate that revenue, which in April Intel forecast would be from $8 billion to $8.6 billion, has been steadied by sales to APPL-- which recently began using Intel processors in many of the machines it sells.

Chip buyers, knowing that lower-priced wares will soon be available, are logically refraining from buying AMD chips now, in anticipation of going on a low-priced buying spree in a few weeks.

AS this price war intensifies, I believe Intel has the advantage over AMD. Clearly, INTC is standing on the taller pile of cash, and holds the commanding heights in profitability. Therefore, it can cut steeper in prices should it needs to. AS this battle prolongs, AMD's cash will dwindle.

 

Joe Osha, a colleague from Merrill Lynch, said the following in a letter to clients, "we expect Intel to begin taking share in desktop while defending its dominant position in mobile. The next big competitive inflection point for AMD is mid-2007, when AMD launches its first real mobile processor architecture. Until then, it looks like quite a fight between the two processor companies., with rapidly expanding manufacturing capacity at AMD to boot.” Osha kept his rating at “neutral.”

Bank of America’s Sumit Dhanda: “Various factors lead us to believe that the [worst] may not yet be behind for AMD. Specifically, we believe that 1) a continued deterioraton in AMD channel inventory, 2) difficult comps heading into Q3, which will revert back to a normal 13-week quarter, 3) margin impact from late quarter price cuts, which will be felt almost entirely in Q3, 4)strong likelihood of share loss to Intel in [the second hald], and 5)an elevated cost structure heading into ‘07, will result in further downward adjustments to AMD’s consensus forecast.” Dhanda cut his price target on the stock to $20, from $34, maintained a neutral rating and asserted that the valuation is “unattractive.”