by: richardtyler2006

Long-Term Sentiment: Strong Buy 02/04/06 01:26 pm

http://www.eweek.com/article2/0,1895,1914991,00.asp

From the above article:

AMD market share: 18.2% in 2005
Intel market share: 81.8% in 2005

http://www.xbitlabs.com/news/cpu/display/20050602023614.html

From the above article:

AMD's CEO expects to have 33% market share by 2007 - 2008 time frame.

http://finance.yahoo.com/q?s=amd
http://finance.yahoo.com/q?s=intc

Now, look at the market cap for AMD and Intel from the above link:

AMD has about $16 Billions market cap (11.35% of the total market cap)
Intel has about $125 Billions market cap (88.65% of the total market cap)

So the total market cap for both companies is $141 Billions.

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If AMD has 50% of market share and Intel has 50% of market share, then, AMD should have a market cap worth about 50% of the $141 Billions, which equates to about $70.5 Billions.
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Since AMD has 18.2% of the market share, it should have about 18.2% of the total market cap, not 11.35%.

So 18.2% of the total $141 Billions market cap equates to $25.66 Billions market cap.

AMD has about 404 Million shares outstanding.
So $25.66 Billions divides by 404 Million shares = $63.51 per share

At the current $40 a share, AMD is undervalued.

AMD's CEO expects to have 33% market share in the next 2 years. That's almost twice more market share than now!

AMD will be worth a lot more next year, as AMD gains more share.

http://news.zdnet.co.uk/0,39020330,39233872,00.htm

EXCERPTS:

"Recent analyses also have indicated that AMD has outsold Intel in desktops in US retail stores....."

http://www.cdrinfo.com/Sections/News/Details.aspx?NewsId=15287

EXCERPTS:

"AMD Opens New 300mm Fab 36 In Dresden, Germany "

"AMD plans to add production output on a steady year-to-year basis, giving it the potential to ship as many as 100 million units in 2008, while also keeping fab utilization at consistently high levels. This will help AMD meet growing demand for its AMD64 processors and achieve its objectives of capturing a significantly larger share of the x86 microprocessor market in the coming years. "

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AMD should be trading at around $63.51. AMD is undervalued at $40.

Any positive news that comes out every week mentioning about AMD growth will only push AMD stock price higher and higher.

Watch for news from Dell on Feb 16.

Keep an eye on AMD on Feb 16.