Re: AMD
Disclaimer: I work for intel.
I think your conclusion is correct that you shouldn't buy AMD. However I think your reasoning isn't really based on anything substantial.
Your reasoning should follow this line of thought...
Intel and AMD have been at each others throats for the last 6 years since the bursting of the tech bubble. The only product that they sell that impacts the bottom line is the PC processor. Several facts about PC processors are worth mentioning here.
1. The PC processor is the most complex thing that humans have designed and built. Each successive generation requires more resources than the previous ones to increase performance. They aren't really designing these things to go much faster any more. They are just putting more and more "cores" onto each piece of silicon. This method of increasing performance has a limit. Not too many people are going to be able to utilize 32 or 64 cores.
2. The average selling price of these things has been falling for years. Margins on the actual manufacturing of these chips are still high >50%. That means there is still plenty of room for prices to fall further.
3. No new uses for these chips outside of PCs (except maybe game consoles, but no margins there either) are on the horizon. Even the most complex piece of mass produced electronics equipment is fairly specialized and can get by on much less processing power.
4. Growth into new consumer markets (third world) is happening but not at prices or volumes that either of these companies would like. Individuals and businesses simply can get by with older slower cheaper units.
5. The real growth is in internet data centers ala google. Even this growth is not big enough in volume to make up for the competitive price pressures and increasing costs of designing these chips.
Neither of these companies holds much LONG TERM interest for me as an investor. AMD might have a better chance at share price appreciation just because they can grow into intel's market share. Intel has shown it will fight (through pricing) to maintain its market share.
Illustrating these market forces...
INTC is priced about the same as 10 years ago.
AMD is priced about the same as 20 years ago.
In light of this neither looks good for an investment.
As far as shorting and buying puts, I can't really predict short term price movements (who can?) and those aren't really long term plays.
Max
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