Advanced Microdevices Inc. (NYSE:AMD) CFO Robert Rivet met with analysts today in New York to discuss the company's financials and industry prospects. Investors and analysts were particularly focused on AMD's recent acquisition of ATI, which some thought could hurt the company's balance sheet. However, Rivet dispelled these concerns, stating that cost cuts from the ATI deal were much higher than expected and projected that ATI would add $80 million to the company's $160 million in new revenue this year as a result of the acquisition. The CFO also noted that he expects laptop chip demand to outpace desktop chips in 2007 - something which the company is well prepared for. Meanwhile, AMD CEO Ruiz told analysts, "The future is incredibly bright". These comments moved the stock up over 4% in intraday trading.

But is AMD a buy yet? Well, the company's shares have cut in half from $40 to $20 per share in 2006, after lackluster results combined with the then-questionable purchase of ATI caused investors to dump their shares, and Intel Corporation (NYSE:INTC) shares also faced a steady decline from $25 to $20 per share during the same period. But where do the two companies stand in terms of valuation? Well, one of the best ways to quickly determine valuation is using the PEG ratio, because it takes into account a company's growth rates. AMD currently trades with a PEG of 1.20 while INTC's stands at 2.06, with the industry PEG at 1.57. This indicates that AMD shares remain undervalued in relation to their competition, and particularly in relation to Intel. This discount was likely due to uncertainty surrounding the company's acquisition of ATI along with a poor industry outlook; but, with AMD's new projections today, along with their comments regarding the ATI cost savings, we could AMD shares return to industry valuations. This makes AMD a stock worth watching.

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