Investing: AMD has promise but still lags Intel
Question: I am an Advanced Micro Devices Inc. shareholder. How is it faring in the chip competition?
Answer: AMD has promising new products, but it’s not Intel Corp. That’s its biggest obstacle.
Because Intel is the world’s largest semiconductor company, with about 80% of the market, it has the financial capacity to put greater effort into the research and development of new chips.
AMD has enjoyed strong competitive stretches against Intel, most notably 2003 to 2006, but it hasn’t been able to sustain the momentum.
Dirk Meyer was forced out as chief executive in January because the board felt he wasn’t moving fast enough into new markets such as tablet PCs and smart phones. A search is underway for a replacement, who won’t necessarily come from the semiconductor industry.
AMD shares have been relatively flat this year after a 15% decline last year. The company’s fourth-quarter revenue was flat, but better than analysts expected.
The company’s new Fusion chip, which combines microprocessors with graphics processors, is promising. So is its Bulldozer product line, which packs more processing cores onto chips.
AMD has made some good strategic moves. It acquired graphics processor and chipset-maker ATI in 2006. Later, it spun off its manufacturing operations to form the joint venture GlobalFoundries with an Abu Dhabi investment company, reducing its production costs significantly.
Vanguard fund is not about taking risk
Question: How good is Vanguard Wellesley Income fund?
Answer: Are you feeling conservative? This fund is, with 57% of its portfolio in bonds, 37% in dividend-paying stocks and the rest in cash.
It mixes an excellent long-term record with moderate risk and low costs.
The $20-billion fund is up 13% over the last 12 months to rank below the midpoint of conservative allocation funds. Its three-year, five-year and 10-year annualized returns of 6% were in the top 10% of its category. The management team is relatively new, but both managers are veteran investors.
“Vanguard Wellesley Income is a core holding, and although the investor must keep in mind that it could be affected by inflation and rising interest rates, over the long haul it has weathered periods of rising rates and done well,” said Dan Culloton, mutual fund analyst with Morningstar Inc.
Industrial materials make up about 20% of the fund’s stock portfolio, with healthcare, energy, financial services and consumer services each representing more than 10%.
Andrew Leckey answers questions only through the column. Write to him at yourmoney@tribune.com.
