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- AMD didn't have a favorable Q4 earnings or Q1 outlook.
- The company is looking to restore growth starting in the second quarter.
- AMD can realize modest gains for the year with a few business repairs and new product launches.
Why AMD Remains A Speculative And Dangerous Investment
- AMD underperformed in the current fiscal year because the core business lost market share to rivals in both CPUs and GPUs.
- AMD's CPUs and GPUs fell behind the performance of competing chips from rivals.
- The semi-custom business could also be in trouble, as it's unlikely that console shipment growth will offset declining ASPs.
- AMD will reach the part of the console refresh cycle where console shipments plateau, and from there semi-custom chips will generate less revenue.
- AMD will have difficulty generating profit on a non-GAAP basis in the upcoming fiscal year, which is why I reiterate my negative stance on the company.
- Although initially shocking, AMD's Q4 earnings were very much inline.
- AMD continues to have problems in discrete GPUs, which are not likely to improve until the close they technology gap with Nvidia.
- Much of Q1 guidance is related to seasonality, much of the remainder is working through excess downstream desktop inventory.
Earnings Review: AMD Focuses On Reigniting Its PC Business And Continued Growth In New Markets
- Q4 2014 revenue declined 13% sequentially and 22% year-on-year, which was in line with company guidance.
- The company feels confident that it is taking the right actions to return the PC business to a healthy trajectory starting in the second quarter.
- AMD is focusing on introducing a strong product portfolio in 2015.
- The whisper number is $0.00, one cent behind the analysts' estimate.
- AMD has a 42% positive surprise history (having topped the whisper in 22 of the 53 earnings reports for which we have data).
- The overall average post earnings price move is 'negative' (beat the whisper number and see weakness, miss and see weakness) when the company reports earnings.
- AMD reports its fourth quarter and full-year 2014 earnings.
- Analysts' broad guidance for the upcoming first quarter results shows uncertainty of the company's future performance.
- Investors will be interested in signs of sustainability and confidence to make it through 2015.
Algorithmic Breakdown Of AMD Points To A Bearish Short-Term Outlook
- AMD gained market share for x86 processors - not as impressive as it might sound.
- Computing and Graphics division head leaving to seek better opportunities raises doubt.
- Company shares plunge while semiconductor indexes soar.
- Algorithmic analysis points to a price decline in the next few days.
- AMD will report its Q4 2014 earnings on January 20th.
- AMD’s stock price has declined by approximately 40% in the last six months.
- Our price estimate of $4.12 for AMD is at a more than 50% premium to the current market price.
- AMD’s graphics business is going to be extremely important for 2015.
- Lisa Su declared that AMD has a share-gaining opportunity in the pipeline later this year.
- AMD has built many attractive features and partnerships to help skew gamers towards its brand.
- The company has made progress over the last year, but the stock price has been under pressure due to the poor condition of the PC market.
- New product launches can give AMD an edge over its competitors.
- Growing console sales is good news for AMD and it will certainly allow the company to grow revenues.
AMD: 2014 Recap And What To Expect In 2015 And Beyond
- AMD continues to struggle in the Computing and Graphics business due to ongoing weakness in the consumer PC market. The company lost some market share to Intel (Bay Trail) in 2014.
- AMD believes that its increasing focus on the commercial PC segment will help it improve its performance in this segment.
- The embedded market is a very competitive market and AMD's strategy is to play to its strengths.
- AMD is diversifying its semi-custom business beyond gaming, and claims that the semi-custom design win pipeline remains strong. It expects this division to be an important source of revenue for the company in the future as well.
- Before the ATI acquisition in 2006, AMD received virtually all of its revenue from selling x86 chipset for PCs, notebooks and servers, etc.
- Today, these chips ostensibly only consist of a third of the company's overall revenue.
- At the end of 2015, AMD wishes for its overall revenue to be 50% reliant on the PC, but this includes discrete consumer and professional graphics.
- In the past, AMD's x86 chip sales for PC have held the stock down due to their dramatic decline. So how important is this business now?
AMD Consecutively Sets 52-Week Lows - Should You Buy?
- This article offers insight to those who have taken an interest in AMD’s price drop.
- As of writing on Wednesday, the stock set new 52-week lows every day this week.
- AMD is executing on its strategy, but the future is still speculative.
- Nvidia's second-generation Maxwell graphics processors outclass AMD in performance and efficiency.
- AMD might be responding soon.
- Graphics is very important to AMD's short-term future, and a recent leak, among other factors, could prove advantageous for the company in 2015.
- The mobility SoC codenamed Carrizo and Carrizo-L are stuck at 28nm, and aren't very marketable in comparison to Intel's Core M lineup for tablets.
- AMD is unlikely to have much success with dense serve over the intermediate term, as Intel's server solutions are way ahead of AMD in terms of efficiency and performance.
- Qualcomm will release a lineup of server class CPUs, which will compete directly with AMD's dense server offerings.
- Yesterday, AMD announced its latest update to its APU lineup, Carrizo.
- The new chip, Carrizo, is seemingly on time.
- Being on time was one of CEO Lisa Su's goals, and this could mean that AMD is leaving behind its old, infamous ways of tardiness.
AMD Introduces New Mobile APUs, Slashes Price Of Exisiting Ones To Gain Back Lost PC Market Share From Intel
- AMD announces new mobile APUs designed as complete solutions for gaming, productivity applications and ultra high-definition 4K experiences.
- AMD continues to struggle in the Computing and Graphics business due to ongoing weakness in the consumer PC market.
- We believe in the company’s long-term growth potential, reflected in our price estimate of $4.12, which represents a more than 50% premium to the current market price.
- AMD believes its increasing focus on commercial PCs will help it improve its performance in this segment.
- AMD also improved its notebook APU mix last quarter - Kaveri processors saw mobile design wins and its higher-end mobile processor unit shipments increased nearly 50%.
- AMD also devised a unified gaming strategy in that addresses its plan to drive the gaming market across consoles, cloud platforms, tablets and PCs.
Yesterday, 12:03 PM
- A Chinese media rumor that local CPU vendor BLX IC Design Co. is looking to acquire AMD (AMD +4.5%) has given a lift to the beaten-down chipmaker's shares. It doesn't hurt that 129.2M shares (20% of the float) were shorted as of Dec. 31.
- Thanks to low expectations, AMD rallied last week in spite of providing soft Q1 guidance to go with a slight Q4 EPS miss. Today's gains come as Intel sells off due to Seagate's light Q1 guidance.
- Update (3:08PM): Bernstein's Stacy Rasgon is skeptical about the rumor. Among other things, he notes Intel's x86 instruction set license to AMD "does not transfer under a change of control." AMD is now up 6.7%.
Tue, Jan. 20, 4:53 PM
- AMD expects Q1 revenue to be down 15% Q/Q (+/- 3%). At the midpoint, that implies revenue of $1.05B, well below a $1.2B consensus. But with shares having made fresh 52-week lows earlier today - they closed regular trading down 6.3% - investors are cutting the company some slack.
- Q4 computing/graphics (PC CPU/GPU) sales -25% Y/Y to $662M (share loss), with an op. loss of $56M. Enterprise, embedded, and semi-custom sales -17% to $577M (lower console-related shipments), with an op. profit of $109M.
- Gross margin fell 100 bps Q/Q and Y/Y to 34%. Thanks to job cuts, R&D spend fell 19% Y/Y to $238M, and MG&A spend 15% to $144M. Free cash flow was $94M.
- AMD ended Q4 with $1.04B in cash/marketable securities, and $2.21B in debt.
- Q4 results, PR, CFO commentary (.pdf)
Tue, Jan. 20, 4:17 PM| 37 Comments
Mon, Jan. 19, 5:35 PM
Fri, Jan. 16, 12:43 PM
- Intel (INTC -0.4%) is off fractionally after providing in-line revenue guidance and a soft gross margin forecast to go with a Q4 beat. Charter Equity has downgraded to Market Perform, and Stifel (Buy) has upped its target by $2 to $41.
- Not surprisingly, bulls are focusing heavily on the 25% Y/Y growth posted by Intel's server CPU unit (DCG). Jefferies: "To say DCG is a hidden gem is an understatement ... all four segments (Enterprise, Cloud, High-Performance Computing, Networking) posted growth. We think Intel’s new server cycle (Grantley) helps in 2015, but view drivers in DCG to be largely secular."
- Also going over well: Intel's 2014 capex ($10.1B) was below prior guidance of $10.5B-$11.5B, and its 2015 guidance midpoint is only at $10B. Wells Fargo observes the 2014/2015 figures are below 2011-2013 levels of $10.7B-$11B, even though "2015 revenue that is likely to be substantially higher than in any of these years."
- Those less positive often highlight slowing PC CPU growth. Ascendiant Capital thinks Q4 PC CPU division revenue ($8.9B, +3%) fell short of a $9.2B consensus. "It looks as though the upgrade cycle is tapering off and we expect a return of a secular declining PC market in 2015." Bernstein, reiterating inventory concerns: "Intel’s [PC] unit shipments still remain well above market data on a YoY basis, and account receivable DSOs increased sharply."
- Intel has guided for PC division sales to fall by a low-single digit % in 2015, following a strong 2014 boosted by an inventory refresh and share gains against AMD (AMD -4.2%). AMD, which reports on Jan. 20, is selling off today.
- On the CC (transcript) CEO Brian Krzanich stated Intel shipped 46M tablet CPUs in 2014, beating a goal of 40M, and that the company is committed to driving out $800M in mobile chip unit costs in 2015. Thanks in large part to heavy marketing subsidies, the unit posted a $4.2B 2014 op. loss.
- Prior Intel earnings coverage
- Update: With the help of a tech rally, Intel closed up 0.7%. AMD closed down 5.2%.
Mon, Jan. 12, 6:55 PM
- John Byrne, named the GM of AMD's Computing and Graphics Business Group only last June, is leaving to "pursue other opportunities." Two other execs - chief strategy officer Raj Naik and chief marketing officer Colette LaForce - are also leaving.
- CEO Lisa Su will handle Byrne's job until a replacement is found. His division covers "AMD’s client, consumer graphics and professional graphics businesses, as well as their related product engineering and sales functions."
- Su has been busy putting her mark on AMD since becoming CEO in early October. Job cuts were announced on Oct. 16, and a new operations chief was named last month.
Mon, Jan. 12, 5:58 PM
- IDC estimates global PC shipments fell 2.4% Y/Y in Q4 to 80.8M - a bigger decline than Q3 and Q2's 1.7%, but better than expectations for a 4.8% drop. Gartner is more positive, estimating shipments rose 1% to 83.7M.
- Both firms observe emerging markets, where tablet cannibalization remains a major issue, remain in worse shape than developed markets. IDC also states commercial PC demand (boosted earlier this year by MSFT's ending of Win. XP support) has slowed, and that "market progress has been fueled by low-priced systems, including growth of Chromebooks and [Microsoft's] promotion of Windows 8 + Bing."
- On the bright side, both IDC and Gartner report Asia-Pac returned to positive growth, and that broader consumer demand is gradually improving. The U.S. consumer market is expected to return to positive growth in 2015, aided by slowing tablet demand and the Windows 10 launch.
- IDC believes all top-5 vendors gained share from rivals with less scale. A quarter after cracking the top-5 for the first time with a 6.3% share, Apple's (NASDAQ:AAPL) unit share is believed to have risen to 7.1% (+130 bps Y/Y) on the back of 4.9M shipments (+18.9%). Given higher ASPs, revenue share might be around 15%.
- Market leader Lenovo's (OTCPK:LNVGY) share rose 140 bps to 19.9%; #2 HP's (NYSE:HPQ) rose 300 bps to 19.7%; #3 Dell's rose 140 bps to 13.5%; #4 Acer's (OTC:ASIYF) rose 40 bps to 7.7%. Non-top 5 firms saw their share drop 740 bps to 32.2%, with their shipments declining 20.7%.
- Intel (NASDAQ:INTC), which tends to have good visibility into industry demand, reports on Thursday.
- Related tickers: AMD, NVDA, STX, WDC, HTCH
Mon, Jan. 5, 10:32 PM
- Cumulative PS4 sales were above 18.5M as of yesterday, Sony (NYSE:SNE) discloses at CES. That means 5M units have been sold since the end of October, when sales stood at 13.5M.
- Xbox One sales, for reference, stood at 10M in November. Microsoft slashed prices by $50 in early November in an attempt to boost holiday season demand.
- Around the time of the PS4's launch, IHS estimated CPU/GPU supplier AMD received $100 per PS4 shipment. Today's price might be lower, given chip ASPs typically drop over the sales life of a console. Regardless, with AMD's Q4 revenue consensus only at $1.24B (-22% Y/Y), it's likely quite happy to hear Sony's sales figure.
- Also: 1) Sony has refreshed its Android Wear-based SmartWatch 3 (launched in September), providing it with a stainless steel body. The watch's display and processor remain the same. 2) Sony states all of its 2015 Bravia TV models will run on Google's recently-launched Android TV platform.
- Prior CES coverage
Mon, Jan. 5, 12:17 PM
- Four months after launching its first 14nm Broadwell CPUs - the ultrabook/tablet-focused Core M line, also known as Broadwell-Y - Intel (INTC -0.5%) has rolled out over a dozen CPUs based on its Broadwell-U architecture, which targets mainstream notebooks and smaller desktops. Plenty of products featuring the chips should be shown off at CES.
- The dual-core CPUs will be sold under the Celeron, Pentium, and Core i3/i5/i7 labels, and (naturally) come with integrated GPUs. Most have an official max power draw (TDP) of 15W, but a handful have 28W TDPs and also come with relatively powerful Iris 6100 GPUs. The Core M line can deliver sub-5W TDPs.
- Intel claims a Core i7 Broadwell-U CPU can respectively deliver 22% and 50% increases in 3D graphics and video conversion performance over a comparable 22nm Haswell CPU, and (perhaps more notably) up to a 1.5-hour increase in battery life. Quad-core Broadwell parts aimed at tower desktops and high-end notebooks aren't expected until mid-2015.
- Rival AMD's (AMD -1.1%) most advanced PC CPU lines still rely on 28nm processes; the company has promised 20nm parts will arrive later this year.
- The launch comes as MKM makes a belated upgrade to Buy, and hikes its target by $5 to $45. "We likely kept our neutral rating (with positive bias) for too long as PCs stabilized, data center improved, and INTC demonstrated a flexible approach to succeed in tablets and access existing China consumer channels."
- MKM is also upbeat about server CPU demand, given new product cycles and strong cloud and big data-related demand. Intel has forecast its server CPU division sales will rise at a 15% annual clip through 2018. PC CPU division sales are expected to fall slightly in 2015, following a strong 2014.
- Also: Intel has bought a 30% stake in smart glasses maker Vuzix for $24.8M. The investment follows an alliance with eyewear giant Luxottica, and a WSJ report that the next version of Google Glass will sport an Intel CPU.
Dec. 15, 2014, 5:01 PM
- James A. Clifford, until now RF Micro's (NASDAQ:RFMD) VP of global sourcing and foundry tech, has been hired by AMD to be its SVP of global operations. The job puts him in charge of "all aspects of AMD's end-to-end manufacturing and supply chain strategy."
- Clifford, 69, spent less than two years at RF Micro. He previously spent 17 years in executive roles at Qualcomm, and 20 before that at Unisys.
- The appointment comes two months after AMD named Lisa Su, who for a short while was the chipmaker's COO, its CEO. AMD hasn't named a COO to replace Su.
Dec. 9, 2014, 4:49 PM
Dec. 8, 2014, 4:00 PM
- AMD (AMD -3.4%) is now down 34% in a year has seen PC CPU share losses to Intel and concerns about console APU margins exact a heavy toll. After factoring net debt, the chipmaker trades for a mere 0.8x 2015E sales.
- Some bulls have been upbeat about the potential of AMD's upcoming next-gen flagship GPU (codenamed Captain Jack) to help it regain high-end GPU share, after leaked benchmarks showed it outperforming Nvidia's recently-launched GTX 980.
Nov. 13, 2014, 8:37 AM
- The WSJ reports Microsoft (NASDAQ:MSFT) has reached a deal to buy Israeli cybersecurity/identity-protection software firm Aorato for ~$200M, and plans to announce it today. The paper reported in July a deal was close.
- Aorato's products complement Microsoft's Active Directory enterprise authentication/ID-management software service, since they analyze Active Directory interactions to create user profiles and detect suspicious activity. There could also be synergies with the cloud-based Azure Active Directory service.
- In its latest effort to grow its developer base (previous) and support rival platforms, Microsoft is open-sourcing the server stack for its.NET software framework (underpins many Windows apps), and allowing developers to write server/cloud-based .NET apps for Linux and Mac OS. The move could help .NET better compete against alternatives such as Ruby on Rails and PHP.
- Microsoft has also: 1) Launched a free version of its mainstay Visual Studio 2013 app development suite for non-enterprise users. 2) Previewed Visual Studio 2015, which the company says is "built from the ground up with support for iOS, Android and Windows."
- Microsoft says it will "shortly" reach 10M Xbox One sales, and that sales have tripled since a $50 price cut went into effect on Nov. 2. The latest figures still leaves the One's total sales behind the 13.5M seen by the PS4 as of the end of Q3.
- The pickup in Xbox One sales is a positive for CPU/GPU supplier AMD, which was estimated by IHS last year to receive $110 per unit.
- Update: Microsoft has confirmed the Aorato acquisition. "We are making this acquisition to give customers a new level of protection against threats through better visibility into their identity infrastructure."
Oct. 31, 2014, 5:28 PM
- Sony (SNE +5.8%) sold 3.3M PlayStation 4 units in calendar Q3, up from 2.7M in Q2 and easily outpacing the 2.4M Xboxes sold by Microsoft in Q3. In addition, Sony reported its gaming unit posted a $195M profit, up from $43M in Q2 thanks to rising PS4 game royalties.
- VG Chartz estimates Sony has cumulatively sold 12.3M PS4 units since last fall, and Microsoft 6.1M Xbox One units. To boost sales, Microsoft recently slashed Xbox One prices by $50 - starting Nov. 2, the One sells for $349 without a Kinect, and $449 with one.
- Electronic Arts (EA +2.8%), Activision (ATVI +1.9%), and Take-Two (TTWO +4.7%) outperformed again today. All three game developers rallied yesterday after Take-Two posted a big FQ2 beat on the back of strong sales for Grand Theft Auto V, NBA 2K14, and Borderlands 2. EA jumped thanks to an FQ2 beat and strong EPS guidance the day before.
- GameStop (GME +1.5%) and PS4 CPU/GPU supplier AMD (AMD +1.8%) are likely also happy with Sony's PS4 sales figure.
Oct. 27, 2014, 5:41 PM
- Forrest Norrod, formerly the head of Dell's server ops, is now the GM of AMD's enterprise, embedded, and semi-custom chip unit. He'll report to new CEO Lisa Su.
- Before running its server unit, Norrod was once in charge of Dell's global engineering teams. He also once ran Cyrix and National Semi's integrated x86 CPU business.
- AMD's enterprise, embedded, and semi-custom chip sales rose 21% Y/Y in Q3, and accounted for 45% of total revenue. For now, the unit's sales depend heavily on PS4/Xbox One APU shipments, but AMD is making big investments to grow its server CPU lineup (both ARM and x86).
Oct. 27, 2014, 10:29 AM
- Bloomberg reports Microsoft (MSFT -0.7%) has a test version of Windows Server that runs on ARM (ARMH -0.9%) server CPUs. Currently, Windows Server only runs on x86 CPUs, primarily from Intel (INTC -0.7%).
- Windows Server support would provide a major boost to the fledgling ARM server CPU ecosystem; software support has remained a question mark for it even as the likes of Dell, H-P, and Facebook gave their backing. OS support would still need to be followed by app support.
- AMD (AMD +0.4%), Cavium (CAVM -1.3%), AppliedMicro (AMCC -1.8%), and Marvell (MRVL -0.6%) have each unveiled ARM server CPUs, while often promising better power efficiency than Intel's offerings. Supporters have also noted the potential for ARM-based parts to be optimized for specific tasks (security, storage, networking, etc.); Cavium is among the leaders here.
- Intel, for its part, is countering with both low-power Atom server CPUs, and more power-efficient versions of its mainstay Xeon server CPUs (such as the just-launched Grantley). IDC estimates x86 servers (largely running on Windows Server of Linux) accounted for 78% of Q2 server industry revenue.
- Providing ARM support for Windows Server would fit with Satya Nadella's strong interest in broadening the device/platform reach of Microsoft's software and services.
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