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AMD -7.8% AH after warning it expects Q3 revenue to fall 10% Q/Q, well below prior guidance of...

AMD -7.8% AH after warning it expects Q3 revenue to fall 10% Q/Q, well below prior guidance of -4% to +2%. Gross margin is expected to be just 31% vs. prior guidance of 44%, partly thanks to a $100M inventory write-down. The chipmaker says it's seeing weak demand across all product lines - slumping PC sales are having an effect, but the size of the drop also suggests share losses to Intel and/or Nvidia. INTC -0.4%.
Comments (33)
  • Archman Investor
    , contributor
    Comments (2353) | Send Message
     
    It is truly amazing that people still invest in this company. People really just love following Wall Street right over the cliff.

     

    There are so many other great opportunities out there.
    11 Oct 2012, 04:48 PM Reply Like
  • mitrado
    , contributor
    Comments (1948) | Send Message
     
    Now everyone is following Apple into the cliff, waiting for it to run higher and higher and higher and higher.
    Apple is no longer what it used to be. It's products are worse every year... and consumers will eventually get fed up with their monopolizing attitude. I'll be laughing a lot when AAPL crashes.
    12 Oct 2012, 07:56 AM Reply Like
  • piggysun
    , contributor
    Comments (111) | Send Message
     
    That is because people are building Window8 computers for holiday season, none of AMD's business. The analysts are so dumb...
    11 Oct 2012, 04:52 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (8821) | Send Message
     
    Jeez - a warning a week ahead of the report? Did they not see this coming sooner?
    11 Oct 2012, 04:53 PM Reply Like
  • JYucca
    , contributor
    Comments (203) | Send Message
     
    Ashraf, the inventory write-down was a decision they probably postponed as long as they could.
    11 Oct 2012, 05:07 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (8821) | Send Message
     
    The inventory write down I can understand, but the lower ASPs should have been something the company saw much earlier.
    11 Oct 2012, 05:23 PM Reply Like
  • Pablo87
    , contributor
    Comments (115) | Send Message
     
    When the pc guys write down inventory, its to get rid of it so prices are dropped immediately and then to add insult to injury, the partners ask for price protection which further impacts revenue. SOP for 30+ years though there was a lot less PP in the old days.
    11 Oct 2012, 05:56 PM Reply Like
  • Sal Marvasti
    , contributor
    Comments (1364) | Send Message
     
    I expected margin to fall below 40%. 8% drop in PC demand is not a joke. Anyways don't worry intel will not be able to keep 60% margins either. ARM is eating into consumer pockets. My question is , how much bad news is priced into the share price? After finance director quit, shares dropped 10%. That drop would be explained by this miss. But how much lower can it go? What about fundamental future demand forcast?
    11 Oct 2012, 06:32 PM Reply Like
  • Russ Fischer
    , contributor
    Comments (2307) | Send Message
     
    I'm betting that Intel is finally snuffing AMD. None too soon for me.
    Why would anyone invest in this company?
    11 Oct 2012, 05:14 PM Reply Like
  • AbundantCores
    , contributor
    Comments (109) | Send Message
     
    It's more about Tablets snuffing the PC market than anything, Intel are in the same boat and their shares also reflect that, investing in AMD or Intel right now is a recipe for losing your money unless your going long.

     

    In which case AMD look more tempting given the share price can't get much worse and stand a good chance of improving a lot over the next year or 2.

     

    Intel investment while falling has not fallen near as much as AMD, that is based mainly on brand trust, if they do break into the Mobile and server markets it's not going to climb by the same percentages as AMD who along with a new and competitive Tablet chip, (owners of SeaMicro developing new cloud servers, are also already inside the new Nintendo Wii U, almost certainly in Sony's new PS4 and quite probably also in Microsoft's new Game Console) will have at least one piece of their hardware in every home on the planet.

     

    AMD are not to worried about the revenue loss this year, this is a transitional year for them, they have worked hard to move away from a PC hardware only company to branch out into growing markets.

     

    The Module CPU design (Bulldozer) so slated by Intel and Hardware enthusiasts allows for highly threaded multitasking with modular on DIE GPU acceleration, such design is perfect for cloud computing servers, compact entertainment devices like Game Consoles and mobile devices such as Tablet PC's.

     

    AMD have not been chasing Intel for Desktop performance, they have been busy re-inventing themselves and their hardware for the future.

     

    Anything Intel or Nvidia or ARM have is years behind.

     

    2013 / 2014 is going to be far more interesting.
    11 Oct 2012, 07:31 PM Reply Like
  • piggysun
    , contributor
    Comments (111) | Send Message
     
    doesn't make sense. Intel is making money, delivering 4% dividend. AMD is burning money. Huge differences
    11 Oct 2012, 07:57 PM Reply Like
  • Daniel Radakovich
    , contributor
    Comments (545) | Send Message
     
    Well then, with all this, are you putting your money where your mouth is? As in, shorting Intel, Nvidia, and ARMH and going long AMD? If not, then what was the purpose of that rant?
    11 Oct 2012, 11:05 PM Reply Like
  • Jim Fish
    , contributor
    Comments (298) | Send Message
     
    best of breed is still INTC. INTC's down but not out. Someone talk to me in about 3-5 years when INTC is riding high again... not a shocking report really.
    11 Oct 2012, 05:21 PM Reply Like
  • Russ Fischer
    , contributor
    Comments (2307) | Send Message
     
    You would think the PC is dead if you read The Motley Fool articles that have the teaser line, "Is the PC Dead?" at the end of half of their tech pieces. The teaser, of course, is to try to sign you up for their service. A friend of mine bit on the teaser. The "Special, in Depth Research Report" was actually quite favorable toward Intel. The Apple "Post PC Era" campaign started by Steve Jobs has been timed perfectly. I bought my wife a $1000 iPad. I tried it for a few days; it's cute, but not for me. As it turns out it is not for her either. It is sitting around collecting dust.
    Of course the business news reports and repeats any missed heartbeat in the PC business ad nauseum.
    From a personal standpoint, I am actively in the market for a new PC. Since I was not really interested in personally experiencing the bugs and snafus that always accompany a new release of Windows, I really wanted an Ultrabook running Windows 7. I went to Best Buy intending to leave with a new Ultrabook. They didn't have any! They had some that were called Ultrabooks, but they had a Hard Disc Drive with a tiny Solid State Drive for fast booting. They were heavy and short on battery life. I personally visited every PC outlet that I could think of - no Ultrabooks.
    So I actually bought an Apple Macbook Air at BB and was all giddy about becoming an Apple Groupie. Four days later the Geek Squad at BB still had not moved my data and outlook contacts to the Macbook Air. So, I cancelled the order. I drove over to the Apple Store, with my boat anchor in hand, and was assured that they could get my data and contacts moved over to the new Macbook Air, so I bought one again. Two days later they had lost my contacts and all my files had funny new names on them. At three pounds, eight hour battery life, 12 second boot, nice Apple people support, I was determined to make the Air work for me. Three weeks later I returned the Macbook Air to Apple and am now typing this on my "Boat Anchor".
    After this experience, I am surprised that PCs are selling at all. I find it amazing that PC sales are down only a few percent, if down at all.
    I think the Windows 8 thing is bigger than many think. I've heard that Window 8 will have touch screen capability, voice to text, text to voice , voice commands, better security and some other interesting features. With Solid State Drives, three pound weight, 12 second boot times, eight+ hours of battery life, Ivy Bridge processors with new embedded security features and much better graphics plus Win 8, the Ultrabook PC package format promises to be a Macbook Air +++. Better malware protection alone that doesn't cut the speed of my computer by half or more is incentive enough to upgrade.
    After a decade of churning out the same tired old boat anchors, the post Window 8 Ultrabooks are going to be such a huge multi-feature upgrade that anyone who doesn't wait a couple more weeks to get the real deal Windows Ultrabook deserves to lug a boat anchor around for the next few years.
    Any early discussion of the multiple feature upgrade coming would certainly cause the "Osborne Effect" to come into play and really make PC sales go to zero.
    I notice that the Intel Ultrabook ad campaign has come to a halt probably in deference to the Osborne Effect mentioned above. After the Windows 8 release don't be surprised to see Intel and Microsoft deluge the media with advertising campaigns.
    So, I don't believe the PC is dead. In fact I believe the PC is on the verge of a re-birth like we have not seen since the introduction of the clamshell notebook.
    Intel, with a forward P/E of 10, a PEG ration of .87, a 4.1% dividend is just plain too cheap. With a 22% net earnings rate and even 5% growth, the company should be selling for four times revenue or $40+. The stock market, in this case, is anything but "efficient".
    11 Oct 2012, 05:26 PM Reply Like
  • Pablo87
    , contributor
    Comments (115) | Send Message
     
    Predictable, this is AMD after all. Seriously, the inventory overhang from last quarter could only translate into an inventory write down and sales drop (due to lower prices and price protection). That it took mgmt a full quarter to figure out the full extent though is Unbelievable. Do they even know what's going on?
    11 Oct 2012, 05:50 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (8821) | Send Message
     
    Apparently not, it seems. This is pretty disgusting. But they're coming clean now, so hopefully things will be better in the future.
    11 Oct 2012, 06:31 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9923) | Send Message
     
    AE,
    So how are those INTC buy buy buy recommendations looking now? Still a good company but stock prices going lower in the ST now.
    11 Oct 2012, 10:45 PM Reply Like
  • Trendyglitzcompany
    , contributor
    Comments (561) | Send Message
     
    I don't know about others but for this investor of over 30 years who knows AMD very well and has bought at all time lows twice before, I am thrilled with the news that means nothing important other than panic sellers to sell me shares like they did in AH and will on Friday the long spooky Holiday weekend of October.

     

    I will buy ever 50 cents lower to a penny and my $13 price target stands. AMD is going to be bought out for higher imo but to be safe, I stick with my targets under my ID. This is like RIMM and ANR when they were selling a while back, I was buying.

     

    JMO and not saying for others to buy, sell or hold anything. I'm not a Broker, just an old time investor of over 30 years who trades stocks too.
    11 Oct 2012, 06:36 PM Reply Like
  • Pablo87
    , contributor
    Comments (115) | Send Message
     
    I'm sorry but who's going to buy AMD for $13+ when they can buy it now for less than $5?

     

    The only way out of this morass to $13 is for the BoD and Mgmt to get their collective heads out of you know where and start taking the right path - they know what it is, they just never take it.
    11 Oct 2012, 06:56 PM Reply Like
  • realitybiter
    , contributor
    Comments (219) | Send Message
     
    1) AMD has had horrible management for 30 years. I left the company 26 years ago. They sucked then. (It was worth more in 1983 than today!) When I joined it was a great company, but it was great because there was crazy low hanging fruit. They and Intel were in a dead heat for the prize. Intel pulled away and never looked back. AMD mgmt was clueless what to do, and fell into we "we made a lot of money, therefore we must be smart" syndrome.
    The stock has been dead money since. volatile, but no growth. Countless chip companies came from disgruntled ex-amd-ers....

     

    2) Unless the PC is going to morph into some tool that can read your mind, I don't see it moving off its usefulness asymptote flatline. It is the technological equivalent of #16 nail. Useful, but likely not a lot of opportunity to create disruptive growth. The fact that these devices get cheaper and cheaper only makes the chip space harder.

     

    3) Intel will "give" AMD wins just to keep the lackey around. It helps them argue to the DOJ that they have "competition"
    11 Oct 2012, 07:12 PM Reply Like
  • pman6
    , contributor
    Comments (270) | Send Message
     
    oh jeez. Looks like not all of the bad news is baked in yet.
    You thought it was baked in, but surprise.

     

    it's oversold, and sinks more.

     

    If it didn't give this warning today, the same would have happened after it announced dismal earnings next week.

     

    Now, it would be hilarious if AMD fell another 8% after next week's earnings report. This christmas, no one will be buying AMD products.
    AMD notebooks and desktops are noncompetitive. Overall, they are weak and overpriced.

     

    stop adding this stock to your portfolio. It is not a bargain. Well, maybe when it hits $1.50
    If you are invested in this, buy other stocks to make up for the loss. You are flushing your money down the toilet with AMD.
    11 Oct 2012, 07:42 PM Reply Like
  • elsrmp56
    , contributor
    Comments (176) | Send Message
     
    INTC should buy AMD
    11 Oct 2012, 08:02 PM Reply Like
  • rpgpa
    , contributor
    Comments (65) | Send Message
     
    never fear. eminis will be ramped green as usual
    11 Oct 2012, 10:18 PM Reply Like
  • 1980XLS-2.0
    , contributor
    Comments (525) | Send Message
     
    AMD=

     

    A-ssets of M-ass D-estruction.
    12 Oct 2012, 12:50 AM Reply Like
  • cxin
    , contributor
    Comments (79) | Send Message
     
    INTC will push AMD out of business. Very few people now will buy AMD desktop PC for home use. Cut loss on AMD immediately and get back as much as can, before AMD disappears. AMD possibly only has 2 months left to survive.
    12 Oct 2012, 01:27 AM Reply Like
  • piggysun
    , contributor
    Comments (111) | Send Message
     
    No, INTC will let AMD hanging there forever to avoid lawsuits
    12 Oct 2012, 01:40 AM Reply Like
  • cxin
    , contributor
    Comments (79) | Send Message
     
    Unlikely this time, since Intel's own market share is also threaten by Tablets. Intel will do whatever necessary to keep own advantages.
    12 Oct 2012, 11:40 PM Reply Like
  • JIMSK
    , contributor
    Comments (137) | Send Message
     
    i thought the reason intel stocks were dropping was that amd was a great company who was going to destroy intel .. getting more confused all the time ..
    12 Oct 2012, 02:00 AM Reply Like
  • cxin
    , contributor
    Comments (79) | Send Message
     
    How could $100 million write down happen? AMD's management still release something that market doesn't want anymore?

     

    My guess now is that even the genius like "Steve Jobs" cannot save AMD. It probably will have cash flow problem. Bankruptcy of AMD is very likely by Christmas 2012, and after Jan 2013, AMD this name might no longer exist.
    12 Oct 2012, 02:05 AM Reply Like
  • mitrado
    , contributor
    Comments (1948) | Send Message
     
    Steve Jobs wasn't going to be saviour of Apple as well.
    He joined Apple in 1996. In 1997 you had every analyst saying you to sell Apple around $7 a share. Really clever people, eh?
    12 Oct 2012, 07:59 AM Reply Like
  • cxin
    , contributor
    Comments (79) | Send Message
     
    But why Apple survived in 1997? Who led Apple to develop so great products like ipod, iphone, ipad?
    12 Oct 2012, 11:42 PM Reply Like
  • mitrado
    , contributor
    Comments (1948) | Send Message
     
    Believe or not... Microsoft saved Apple, back in 1997: http://bit.ly/AkMdeX
    13 Oct 2012, 11:48 PM Reply Like
  • MexCom
    , contributor
    Comments (3050) | Send Message
     
    Almost all the chips that they have produced are now worthless. Go to any landfill to see them. And, the analysts are making us believe that they are never to be replaced, LOL.

     

    Can anyone recommend a company that recycles old PC's? Thats where the real growth is for the industry.
    12 Oct 2012, 06:56 AM Reply Like
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