At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
Advanced Micro Devices
(NYSE:AMD) investors got a welcome-back-to-trading gift yesterday, as Citigroup started off the week with an upgrade for Intel's (NASDAQ:INTC) archrival.

Bullish comments from Citi sent AMD stock soaring 9% for the day, but the analyst's suggestion that AMD is poised to gain market share on improved relations with Hewlett-Packard (NYSE:HPQ) seems to have spooked AMD's chipset rivals. According to Citi, AMD's market share is close to a cyclical low at 18%. Any improvement in that number could do wonders for AMD's profit margins, improving both sales and, by increasing the efficiency of production, helping AMD to boost its gross margin.

On the other hand, a larger piece of pie for AMD would have to slice into its rivals' portions. Consequently, IBM, Sigma Designs, and Intel all shed a fraction of a percent on the news, while AMD's other key competitor, graphics chip czar NVIDIA (NASDAQ:NVDA), really took it on the chin -- down more than 2% for the day.

Let's go to the tape
So far, so logical. AMD's going up a lot, says Citi, and so everybody else is going down a bit. But here's where we run into a problem -- it's Citi saying all this. And while Citi may not be exactly the worst analyst on the planet (in fact, it ranks close to the top 20% on CAPS for picks overall), Citi's record in the semiconductor sector in particular just isn't all that great:


Citi Says:

CAPS Says:

Citi's Picks Beating (Lagging) S&P by:




6 points

Texas Instruments (NYSE:TXN)



5 points

MEMC Electronic (NYSE:WFR)



(51 points)

RF Micro Devices (NASDAQ:RFMD)



(124 points)

Across the length and breadth of the equities market, Citi gets slightly more than half of its recommendations right, but in the Semiconductors and Semiconductor Equipment sector, Citi's batting only .386 -- a great record in baseball, but not so hot when your portfolio's on the line.

In illustration of which, the last time Citi recommended buying AMD stock, it promptly cratered, underperforming the market by nearly 33 percentage points. And guess what? Citi's about to repeat that feat.

Here's why: Citi itself admits that "AMD's competitive position is poor and its net debt position classifies the company as low quality." A big chunk of AMD's debt comes due in 2012, which could force it to tap the equity markets to raise cash, diluting shareholders and depressing the shares. Yet despite all these problems, Citi looks at AMD: "trading at just 1.25x Enterprise value/sales, a 45% discount to the [semiconductor] group at 2.3x," and tells us the "risk/reward [is] favorable."

I disagree.

Is AMD selling for a lower EV/sales ratio than its peers? Perhaps it is, but there's a reason for that. By and large, AMD's peers are profitable. IBM, Intel, Sigma Designs -- they don't just sell stuff at a loss; they earn profits on their sales -- a trick that AMD has yet to master.

Unprofitable and consuming cash, AMD has burned through more than $5.8 billion over the past decade. The last time this company generated positive cash earnings was in fiscal 2000. Were AMD simply capable of breaking even on its business, it wouldn't have $3.1 billion in debt dragging down its balance sheet. It wouldn't be facing a looming deadline for paying that debt, and its shareholders wouldn't be worrying "how much are we going to get diluted this time?" (Did I mention that AMD's shares outstanding are down over 65% the last five years?)

Foolish takeaway
Citi looks at all of this and -- somehow -- sees a buying opportunity. Me, I look at the same facts and figures, and see something entirely different: A train wreck.

My advice: Don't board.