Q. Prospects are supposed to be good for technology. What about Advanced Micro Devices Inc.?
P.K., via the Internet
A. Not all tech companies would benefit equally from a solid resurgence in personal computers.
This semiconductor company, for example, must wage a constant battle against Intel Corp., the world’s No. 1 chipmaker and leader in research and development.
Layoffs and restructuring prompted by Advanced Micro Devices’ 2006 acquisition of graphics processor ATI Technologies have been completed, and its core semiconductor business should be profitable by year-end, management has said.
To help reduce its debt load, the firm spun off its manufacturing arm, GlobalFoundries, this year.
Based on the positive industry-wide prospects for tech stocks, Advanced Micro Devices (AMD) stock was up 74 percent this year as of Tuesday. That follows consecutive declines of 71 percent last year, 63 percent in 2007 and 33 percent in 2006.
The No. 2 chipmaker lost $330 million in its second fiscal quarter on a 13 percent sales decline. Earnings of Intel and Texas Instruments Inc., meanwhile, exceeded analyst expectations.
Consensus rating on shares of AMD is “hold,” according to Thomson Reuters, consisting of three “strong buys,” one “buy,” 18 “holds,” five “underperforms” and three “sells.”
Forecast of a five-year annualized growth rate of 4 percent compares with 12 percent expected industrywide.
Q. Is the Berwyn Fund worth putting money in?
M.J., via the Internet
More Top Picks Best Miter Saw
A. While it has been sluggish lately, this small-cap value fund with a concentrated portfolio of about 40 stocks benefits from experienced management.
Lead manager Robert Killen has been on board since its 1984 inception.
The $108 million Berwyn Fund (BERWX) was down 18 percent in the last 12 months through Monday to rank below the midpoint of small-cap value funds. Its three-year annualized decline of 4 percent ranks just outside the top quarter of its peers.
“We recommend the Berwyn Fund as a supplemental holding, a supporting player, but not a core holding by any means,” said Greg Carlson, analyst with Morningstar Inc.
Employing a buy-and-hold strategy, it doesn’t allow its top positions to exceed 6 percent of assets.
Financial services and industrial materials each represent about 20 percent of the fund’s assets, with other concentrations in hardware and industrial materials.
This “no-load” (no sales charge) fund requires a $3,000 minimum initial investment and has a 1.29 percent annual expense ratio.
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Andrew Leckey answers questions only through the column. E-mail him at [email protected].