Articles for AMD

AMD Updates: Weak Results Weigh on Outlook

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Monday, January 30th, 2012 by Trefis Team

AMD’s (NYSE:AMD) stock has been disappointing for investors despite the company bringing in a new CEO. The recent Q4  2011 results release didn’t help either. AMD posted only slight revenue growth and a lower earnings, primarily related to an impairment charge. While rival Intel (NASDA:INTC) celebrated a stellar year, things have been gloomy for AMD and the outlook doesn’t bode too well either. AMD and Nvidia (NASDAQ:NVDA) have stated that hard disk shortage is affecting PC sales, which in turn is affecting their GPU sales. AMD could be particularly affected as the company usually sells lower priced processors and GPUs while shortage implies preference to high-end PCs.

Our price estimate for AMD stands at $8.50, implying a premium of about 25% to the market price.

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Looking Ahead to AMD’s Results After Intel’s

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Thursday, January 19th, 2012 by Trefis Team

AMD (NYSE:AMD) will be releasing its Q4 and full year 2011 results on upcoming Tuesday, Jan 24. Like its rival Intel (NASDAQ:INTC) due out Thursday afternoon, there are certain broad market factors that are likely to impact its quarterly results. Below we take a look at what investors can expect from AMD’s earnings. Apart from Intel, AMD competes with graphic chip designer Nvidia (NASDAQ:NVDA).

Our price estimate for AMD stands at $8.50, implying a premium of about 40% to the market price.

See our complete analysis for AMD

PC Slowdown In Q4 Can Impact AMD’s Results

Unlike the third quarter, Q4 2011 saw a global decline in PC sales by about 1.4% compared to Q4 2010. Even the healthy growth in PC shipments in emerging markets could not compensate for the decline observed in the developed markets such as the U.S. and Europe. Although one could argue that AMD’s lower pricing could potentially moderate this impact as the company might be able to sell its microprocessors even in a weaker environment.

Supply Issues Combined With Hard Disk Shortage

Although the hard disk shortage that resulted from flooding in Thailand in October 2011 is likely to have a modest impact on AMD’s Q4 results, its combination with AMD’s own supply issues could make the impact more notable. Nevertheless this factor may still remain on a moderate side compared to what we can potentially see in next two quarters. The supply shortage could especially be a disadvantage for AMD as OEMs (original equipment manufacturers) will likely give priority to higher priced Intel PCs in situation of shortage.

Cost Measures Could Help

Last quarter AMD announced workforce cuts that implied laying off about 10% of the company’s workforce. According to the company, approximately $128 million in overhead will be cut by year-end 2012. An additional $90 million in savings will come from what AMD management refers to as “operational efficiencies.” A portion of these savings could be visible in upcoming earnings results.

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AMD’s 2011: Full of Challenges that Largely Remain

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Monday, January 9th, 2012 by Trefis Team

In 2011, AMD’s (NYSE:AMD) stock had a tough run. Battling with chip supply issues, a lack of leadership and a dismal performance of its early Bulldozer chips, AMD hasn’t been able to regain investor confidence and has again remained in the shadow of its rival Intel (NASDAQ:INTC). This year may not be easy for the company as the CPU market will get more crowded by the entry of ARM-based processors and shortage will impact at least Q1 2012 results. Furthermore, gaining meaningful market share in mobile computing will still not be easy as the company will face established players such as Qualcomm (NASDAQ:QCOM). Nevertheless with new leadership and thinking, the hope remains that the company can engineer a recovery.

Our price estimate for AMD stands at $8.50, implying a premium of about 55% to the market price.

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AMD Updates to $8.50 Fair Value: Thai Floods Could Hit Supply, Open to ARM Architecture

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Monday, December 19th, 2011 by Trefis Team

AMD’s (NYSE:AMD) stock has taken a slight dip as Intel (NYSE:INTC) cut its forecasts for Q4 citing supply issues resulting from flood in Thailand. Although the company’s CEO has maintained that the supply chain is robust and the impact will not be significant, at least in Q4 2011,  several analysts have expressed the concern and have cut their estimates for AMD.

About 40% of the world’s hard drives are manufactured in Thailand, and so the recent floods are likely to impact AMD as well. We believe the supply shortage could be a disadvantage for AMD as OEMs (original equipment manufacturers) will likely give priority to PCs at the higher end of the spectrum. AMD’s graphics business, which competes with Nvidia (NASDAQ:NVDA), may not suffer as much as PCs as GPUs are likely to be placed in relatively high-end PCs.

See our full analysis for AMD

There were some revelations on product and strategy for AMD in the last couple of weeks. The company’s tone suggests that it might be open to adoption of ARM architecture if business environment demands such a change.

If this happens, this will mark a historic shift for AMD. Furthermore, it seems that AMD might be competing with Intel’s ultrabook initiative with its own thin-form notebook push.

Our price estimate for AMD stands at $8.50, implying a premium of about 60% to the market price.

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AMD’s CEO Outlines New Strategy, Execution Gets Stock to $8.50

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Friday, December 9th, 2011 by Trefis Team

AMD’s (NYSE:AMD)  management recently stated that the new CEO is fostering a new mindset and thinking inside the company that will go beyond to AMD vs Intel (NASDAQ:INTC). The company believes that its domain of competition has broadened and now incorporates mobile chip companies such as Nvidia (NASDAQ:NVDA) and Qualcomm (NASDAQ:QCOM). We agree that the broader consumer shift and convergence of devices is the future rather than around one giant competitor. But some analysts think that AMD is publicly acknowledging its defeat against Intel. We believe that AMD is in fact trying to send a positive message to its investors indicating that there are plenty of other opportunities which the company can tap, other than beating Intel, in order to create value for shareholders.

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AMD Cuts Headcount After Earnings Show Weak Sauce

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Thursday, November 10th, 2011 by Trefis Team

Playing second fiddle to Intel (NASDAQ:INTC) is nothing new for Advanced Micro Devices, Inc. (NYSE:AMD). With its recent slide in sales, AMD’s share of the chip market that serves personal computers, servers and mobile units now stands below 20%, down from 20.6% the prior quarter. Intel’s share of this key market jumped to just over 80%.

The company’s disappointing sales in Q3 center around the oft-delayed central processing unit (CPU) “Bulldozer” product and the refresh scheduled for release this past quarter. The bad news was the weak sales figures that came as a result of the delays, something AMD insiders and investors are all too familiar with. The silver lining is that sales weren’t lagging because of demand, which would have been much more disturbing.

See Full Analysis of AMD’s Stock Here

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AMD Earnings Preview: What We’re Watching Thursday

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Tuesday, October 25th, 2011 by Trefis Team

AMD (NYSE:AMD) is expected to report its Q3 2011 earnings Thursday. A few weeks back, the company communicated its reduced expectations regarding Q3 results leading to a dip in the stock price. We expect that, given the company’s communication in advance, the negative impact of reduced revenue growth on the stock will be minimal after earnings announcement. AMD’s CPU rival Intel (NASDAQ:INTC) released its earnings last week, reporting good results driven by continued growth in PC markets despite economic weakness and increasing competition from tablets such as Apple’s (NASDAQ:AAPL) iPad. It looks like it may not be the case for AMD. Below we discuss what to watch out for, and what we expect.

Our price estimate for AMD stands at $9.91, which is about double the market price.

See our full analysis for AMD
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AMD’s Earnings Thursday to Shed Light on Supply Constraints, New Chips

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Tuesday, October 25th, 2011 by Trefis Team

AMD’s (NYSE:AMD) share price didn’t do much last week though it was up strong on Monday. The company is reporting its Q3 2011 earnings later this week, and it will be interesting to see what AMD has to showcase given its rival Intel (NASDAQ:INTC) beat analysts’ estimates handily. Perhaps, a small portion of Intel’s success might have come by capitalizing on AMD’s supply issues.

See our earnings preview note: AMD Earnings Preview: What We’re Watching Thursday

The past few weeks have been busy for AMD. The company recently came forward to defend its newly launched Bulldozer chip for desktops by mentioning that the chip performs better on upcoming Microsoft’s (NASDAQ:MSFT) Windows 8. However, it seems like the performance gain is not very significant. Furthermore, as far as GPU products are concerned, the company revealed its plans to bring a 28nm GPU chip by end of this year. Not surprisingly, Nvidia (NASDAQ:NVDA) has similar plans.

Also Digitimes recently reported that 50% of AMD’s Llano shipments are going to China indicating that the company is prioritizing this growing market due to supply constraints.

In the near term, the critical event to watch out for is AMD’s Q3 2011 earnings release on Thursday. Intel and IBM’s earnings have shown that PC market is doing well. However there is a good chance that supply issues can sully AMD’s results. Nevertheless general consensus on AMD is positive with average analyst price target of over $7.

We’ll update our estimates following the company’s earnings release.

See our full analysis for AMD

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AMD Struggles for Catalysts as Bulldozer Disappoints

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Thursday, October 13th, 2011 by Trefis Team

AMD’s (NYSE:AMD) stock has traded sideways this week following the official launch of its Bulldozer architecture chips for desktops. Unfortunately, the early reviews of this particular chip are not encouraging and consequently, the near term success of the company remains clouded.

Despite this, the stock has held up not due to any catalysts, but instead due to the fact that it has fallen 30% in the last month already. Most analysts have bullish price targets or market perform rating for AMD given its steep decline.

We think that the upcoming Q3 2011 earnings call will be critical in getting more clarity regarding where the company is headed. AMD is in a dangerous spot as competitive threats from Intel (NADSDAQ:INTC) and Nvidia (NASDAQ:NVDA) threaten to marginalize AMD as the company has failed to keep up with consumer shifts. The company has so far been unable to capitalize on the growing mobile market while remaining vulnerable to the weakened consumer PC market.

AMD needs to either gain share with Llano, do better with Bulldozer in servers or throw out a superb mobile chip in the market if it wants to recover past levels and regain investors’ confidence.

Our price estimate for AMD stands at $9.90, which is about double the market price.

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AMD Struggles This Week as Negative Sentiment, Lack of Catalysts Cloud Outlook

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Friday, October 7th, 2011 by Trefis Team

AMD’s (NYSE:AMD) shares dipped last week when the company lowered its Q3 2011 revenue and gross margin guidance and mentioned some production related issues. The slide continued in early part of this week, but has recovered some in last couple of days. This week AMD introduced its next generation 28nm GPU at Fusion 2011, which wasn’t mind blowing introduction as evidenced from the mum response in the stock.

Additionally several sites revealed details around AMD’s 8-core processors based on Bulldozer architecture. These new developments did not have much impact on the stock. To make matters worse, Sanford C  Bernstein Research downgraded the stock to market perform, which has weighed on sentiment.

Nonetheless we believe that the medium to long term view is solid. In next quarter or two, as AMD gets over supply issues, its Fusion APUs should help gain market share. Furthermore, Bulldozer is promising introduction and AMD is likely to grab some share of server market from its rival Intel (NASDA:INTC). We believe that most important of all, investors need a solid plan from AMD to address growing mobile market where its GPU competitor Nvidia (NASDAQ:NVDA) is already making solid strides. Until these catalysts occure, we may not see a leg up in the shares.

Our price estimate for AMD stands at $9.90, implying a premium of more than 100% to the market price

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