Monday, May 15, 2006

Head-on collision

The summary of my latest post is this:

The market for Microprocessors was going to be excellent for this year.

But some events happened.

AMD did such a terrific job, that naturally and unavoidably put itself in a collision course to Intel. Dell, thanks to the bit of extra pressure it meant having dead-non-competitive processors broke and initiated its collapse, and Microsoft failed miserably at giving a reason to speak of future.

Now that AMD is in a head-on collision course, can it survive?

Sure! The N-Way server market guarantees it thanks to DCA/HTT/ccHTT alone, plus all the traditional competitive advantages.

What would happen if AMD survives a head-on collision against Intel? That it will prove the viability of the Duopoly and will reach who knows what stock price.

In October 2005 something similar happened, good results, and a plunge (although much more moderate), but the priciple is the same: The objective bad news are already here, AMD is priced for its mediocrity and Conroe's (Core2) excellence. If neither is true, well, you know.

Keep writing the covered calls, but only out of the money.