AMD (AMD): "Hardware is the ugly sibling of technology."

Investing

Published: July 21, 2007 8:22 am

Sanford C. Bernstein & Co is saying that as tech spending rises pressure on price for hardware components is actually under more pressure. Hence, the quote above from WSJ.com

AMD’s (AMD) stock started to rally yesterday after results show improving revenue and gross margins over Q1. The stock opened up, at $16.19, a price point it has not seen in several months. But, but the end of the day, it had dropped as low as $15.41.

And, there is reason to believe that the shares will move lower. The evidence in the market is that Intel (INTC) is prepared to keep pressure on prices. Its own gross margins dropped a bit last quarter, so it is keeping pricing at competitive levels.

That is bad news for AMD. The market was beginning to believe that Intel wanted to step away from a bloody battle. But, customers are clearly calling for lower pricing if chip and storage companies want to keep business.

And, that is not good news for AMD.

Douglas A. McIntyre

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