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More on AMD: The company is: 1) Planning to cut 15% of its workforce as part of its...

More on AMD: The company is: 1) Planning to cut 15% of its workforce as part of its restructuring, which it says will be "largely completed" in Q4. AMD expects to achieve $190M in 2013 cost savings, and record $80M in Q4 restructuring charges. Past rumors indicated job cuts of anywhere from 10%-30%. 2) Guiding for Q4 revenue of $1.1B-$1.21B, below a $1.33B consensus. CPU division sales fell 11% Q/Q and 28% Y/Y in Q3, while GPU division sales fell 7% Q/Q and 15% Y/Y - both are clearly losing share. AMD nearly unchanged AH.
Comments (12)
  • Sal Marvasti
    , contributor
    Comments (1364) | Send Message
     
    The gpu is loosing share due to oem sales. But channel sales rising. So in fact AMD could be taking share from Nvidia in the channel. happy not long nvidia yet.
    18 Oct 2012, 05:42 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (8815) | Send Message
     
    Intel was not merciful about taking low end share...AMD needs a better marketing department.
    18 Oct 2012, 06:33 PM Reply Like
  • ephud
    , contributor
    Comments (2204) | Send Message
     
    Ashraf

     

    Marketing can't make up for a poor product portfolio.
    18 Oct 2012, 07:50 PM Reply Like
  • Sal Marvasti
    , contributor
    Comments (1364) | Send Message
     
    No better price. Low end no one cares about benchmarks. Trust me. Hence the 15% cut.
    18 Oct 2012, 07:52 PM Reply Like
  • ephud
    , contributor
    Comments (2204) | Send Message
     
    Salman: So why did they lose market share and have to write off inventory?

     

    Hint: Brown bananas
    18 Oct 2012, 11:03 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    AMD is cutting their margins dramatically. I still think this may have a competitive effect. It is either that, or they go out of business, and the latter is unlikely, despite what some may wish upon them. AMD has 'niche' markets it can maintain and grow (gaming consoles, GPGPU, etc.) that are not PC trend dependent. (Note: I am not a buyer or a holder or a short of AMD.)
    18 Oct 2012, 08:55 PM Reply Like
  • Sal Marvasti
    , contributor
    Comments (1364) | Send Message
     
    Our graphics business performed in line with our expectations. Despite market softness, we continue to see improvement in our desktop discrete channel business, and game console revenue increased. Our industry-leading graphics technologies remain a cornerstone of our end-end product strategy, and we plan to further invest in our graphics business to drive differentiation and future growth across the entire product portfolio.
    18 Oct 2012, 09:36 PM Reply Like
  • Sal Marvasti
    , contributor
    Comments (1364) | Send Message
     
    My sell bias has returned to hold. I will be keeping the rest of my AMD. I said if they dump the GPU r&D I would leave. They aren't. Fantastic.
    18 Oct 2012, 09:37 PM Reply Like
  • tradewin
    , contributor
    Comments (658) | Send Message
     
    I have a question for Salmon Marvell: Aside from the microprocessors, don't these chipmakers also produce many analog chips? And aren't the margins much higher for these items which are used in many things?
    18 Oct 2012, 09:53 PM Reply Like
  • Sal Marvasti
    , contributor
    Comments (1364) | Send Message
     
    No not really. AMD and Intel divested of a lot of their non core IC business long ago. My prediction seems to be coming true, I am again bullish for the long term. Still can go lower short term. See
    http://seekingalpha.co...
    18 Oct 2012, 09:58 PM Reply Like
  • tradewin
    , contributor
    Comments (658) | Send Message
     
    Very good article Mr. Marvell. Thanks. Good trading to you.
    19 Oct 2012, 09:08 PM Reply Like
  • Pablo87
    , contributor
    Comments (115) | Send Message
     
    I'm assuming a loss of $300MM+ for Q4 ($1B x 40% margins less expenses and interest of $550M, further inventory write off of $100MM (as its now sitting close to 90 days DSO, or 2x a year ago) and restructuring of $80MM), and cash balance down to $1.1B (2 payments are due to Global Foundries for Q4).

     

    If the loss is less, then they're probably simply kicking the can down the road and the losses will be added to the Q1 and Q2 2013 losses. We could see cash at $900MM or less by June 2013.

     

    Though that all depends on what agreement is arrived at with Global Foundries and the $500MM shortfall in the wafer supply agreement (WSA) take or pay commitment for 2012, not to mention whatever take or pay is on tap for 2013. AMD simply has no way to take $500MM worth of wafers in Q4 with their current revenue and inventory levels.

     

    I shudder to think what would happen if Global Foundries insisted on AMD fulfilling its part of the agreement.(investors who get dizzy easily are warned not to Google AMD Global Foundries). Ironically, that would probably be the best thing that could happen to the company (though not for equity investors) as it would unshackle it from a relationship that has been a major contributor to its difficulties.
    19 Oct 2012, 10:31 AM Reply Like
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