"The fog comes
on little cat feet.
It sits looking
over harbor and city
on silent haunches
and then moves on."
-- "Fog," by Carl Sandburg

On Thursday night, the underdog in the long-running microprocessor drama reports first-quarter earnings. Is Advanced Micro Devices (NYSE: AMD) still smarting from last year's brutal price wars, or is the company picking up the pieces and moving on already? Let's find out.

What Fools say:
Here's how AMD's CAPS rating stacks up against some of its peers and competitors:

Market Cap (billions)

Trailing P/E Ratio

CAPS Rating

Intel (Nasdaq: INTC)

$128.2

18.9

****

NVIDIA (Nasdaq: NVDA)

$10.3

14.1

****

Broadcom (Nasdaq: BRCM)

$11.6

58.7

***

AMD

$3.7

NA

**

Transmeta (Nasdaq: TMTA)

$0.2

NA

*

Data taken from Motley Fool CAPS on 04/16/2008.

Some of our CAPS players worry about AMD's heavy debt and inability to turn a profit. Others can't imagine that the stock would go any lower than it already has, and hope to see a return from the ATI investment soon in the form of exciting new products. All-star player phegm, who has a negative rating on the stock, exemplifies the stark division in the AMD camp thusly: "I see a lot of high rated fools have the green thumb on this one....I don't see it though....I'm gonna have to dissent."

What management does:
It's not a pretty picture when profit margins sink waist-high in red ink. If you're looking for positives, I'd point out that the hemorrhage has stabilized or even reversed on most fronts, though trailing net income is still a sore spot, even from that perspective.

Margins

10/2006

12/2006

3/2007

6/2007

9/2007

12/2007

Gross

52.6%

50.5%

43.1%

38.4%

36.2%

37.6%

Operating

12.4%

8.2%

(5.7%)

(14.6%)

(19.7%)

(20.4%)

Net

8.8%

(2.9%)

(17.3%)

(28.9%)

(36.3%)

(56.2%)

Y-O-Y Growth

10/2006

12/2006

3/2007

6/2007

9/2007

12/2007

Revenue

8.4%

(3.4%)

(6.8%)

(3.3%)

5.3%

6.4%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
We already know that sales will come in at about $1.5 billion, 15% below the last quarter, and that the company is cutting 1,600 heads across the organization in an effort to control costs. But we don't know why the quarter's sales dropped so far, or how this affected cash flows and income.

Still, the numbers are less important than the action behind the scenes. Listen in on the earnings call if you can: Are the job cuts centered on engineering or sales staff? Is the 45nm processor technology on track for volume shipments anytime soon? Have they worked through the back-inventory of buggy chips that don't work very well in certain server applications? How's the weather in Sunnyvale?

OK, never mind the weather. I simply think that the fog is bound to lift eventually, but "right now" is probably too much to ask. There's either a buyout -- hello, IBM (NYSE: IBM) -- or renewed success in AMD's future, but we have to wait another couple of quarters to see the beginnings of any serious turnaround.

Further Foolery: