Handcuffing Gamers to Advanced Micro Devices (AMD) and Related News (INTC & NVDA)

Unlike other chip makers like Intel Corporation (NASDAQ: INTC) and NVIDIA Corporation (NASDAQ: NVDA), there is something about chip maker Advanced Micro Devices, Inc (NYSE: AMD) and any news about the stock or its products that just brings out both the bulls and the bears at the same time. I should mention that we previously had an open position in Advanced Micro Devices in our SmallCap Network Elite Opportunity (SCN EO) portfolio from last summer up until late January when we locked in a small loss. The reason we got out was not because we lost faith in AMD, but because shares sank once again after its latest earnings report - something it had already done after three previous earnings reports. Nevertheless and if you are an investors with a long term time horizon rather than a trader, holding onto AMD may actually bear some fruit if you keep in mind some of the latest good news about the stock: 

The New AM1 Platform. Yesterday, Advanced Micro Devices announced the introduction of its AM1 platform featuring the AMD quad-core and dual-core "Kabini" APU into the component channel for system builders. AMD wants the AM1 to dominate the low-cost, expandable desktop market – something it can do at an estimated $60 starting price for the chipset and the motherboard combined. TweakTown has already noted that it looks like the company is pushing ahead with plans to dominate the desktop in emerging markets while AMD desktop product marketing manager Adam Kozak told the Inquirer:

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"We're seeing that the market for these lower-cost PCs is increasing. We're also seeing other devices out there trying to fill that gap, but there's really a big difference between what these devices can do versus what a Windows PC can do…. We see it being used for basic computing, some light productivity and basic gaming, and really going after the Windows 8.1 environment with its four cores, which we'll be able to offer for less."

The Inquirer also noted that AMD benchmarked the AM1 Platform against an Intel Pentium J2850 with PC Mark 8 v2 and claimed it produced double the performance of the Intel processor:

Handcuffing Gamers to AMD. In a recent blog post, Advanced Micro Devices announced the AMD Rewards Program, a loyalist program for AMD graphics card users that will give them a chance to earn and redeem points that can be applied to acquire new hardware. This could turn out to be an interesting idea as an article in ITWorld noted:

So I can see why AMD is doing this; call them golden handcuffs. A way to tie players to the platform but in an appealing way. The question is whether it will work. A Sapphire R7 260 runs $139.99 new or 35,000 RP, which would take months to accumulate. If people don't see a payoff within a reasonable time frame, they will bail on the program.

A Bear Makes a Bearish Bet After a Bullish Bet Last Week. The Schaeffer's Daily Option Blog has just noted that on Monday, roughly 23,000 put contracts or nearly three times the typical daily amount changed hands verses fewer than 7,200 calls changed hands. The $4 level was in focus.  However and late last week, Schaeffer's Daily Option Blog noted that calls more than doubled puts with roughly 8,800 calls and 3,400 puts traded. Most active was the April 4 call where more than 2,800 contracts were traded. Shoring Up or Cleaning Up the Balance Sheet. In late February, Advanced Micro Devices announced and concluded a private offering of $600 million 6.75% Senior Notes due in 2019. AMD intends to use the net proceeds to repurchase up to $425 million aggregate principal amount of its outstanding 6.00% Convertible Senior Notes due 2015 while the remaining net proceeds will be used to repurchase up to a maximum of $200 million aggregate principal amount of its outstanding 8.125% Senior Notes due 2017. Whatever is left will be used in tender offers to redeem, repurchase or otherwise retire other outstanding debt. Share Performance. Advanced Micro Devices is down 4.39% since the start of the year, up 52.9% over the past year and up 69.7% over the past five years. Here is a look at its long term performance verses that of chip stocks Intel Corporation and NVIDIA Corporation:

Finally, here is a look at the latest technical charts for Advanced Micro Devices, Intel Corporation and NVIDIA Corporation:

Regardless of whether you are an AMD bull or bear, the above news should give you something to chew on.

SmallCap Network Elite Opportunity (SCN EO) has an open position in AMD. To find out what other open positions SCN EO currently has, and to learn why so many traders and investors are relying on this premium subscription service, click here to find out more.