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Advanced Micro Devices, Inc. (AMD)

  • Mon, Sep. 14, 4:08 PM
    • AMD gave back all of the Friday afternoon gains it saw on a Fudzilla report stating Microsoft is thinking of acquiring the company. 16.2M shares were traded today, nearly matching a 3-month daily average of 16.4M. 30.7M were traded on Friday.
    • "We seriously doubt it," writes Citi's Chris Danely in response to the report, while spelling out his reasons. "Microsoft collaborates heavily with Intel in OS development and PC platform standards (bios, firmware, drivers, etc.). Also, AMD’s core microprocessor business (roughly 30% of sales) continues to lose share and money. We note any company that acquires AMD will need to renegotiate the x86 cross-licensing agreement with Intel – a cumbersome process, in our view."
    • Danely does think it's possible Microsoft could be interested in AMD's semi-custom processor business (provides APUs for both the Xbox One and PS4) or its GPU ops, but doesn't consider those possibilities very likely either. He reiterates a Sell rating and $1.50 target.
    | Mon, Sep. 14, 4:08 PM | 67 Comments
  • Fri, Sep. 11, 2:46 PM
    • A buyout rumor has once more given a lift to AMD (AMD +9.8%): This time, Fudzilla (citing "industry sources") states Microsoft (NASDAQ:MSFT) is "seriously talking" to the hard-luck chipmaker about acquiring it.
    • A number of AMD buyout rumors have come and gone over the years without panning out. KitGuru reported in June Microsoft "may acquire" AMD.
    • AMD was previously trading near breakeven in spite of an upgrade to Market Perform from Bernstein's Stacy Rasgon, who argued bad news has been priced in and that "the possibility of a lifeline may be growing."
    | Fri, Sep. 11, 2:46 PM | 104 Comments
  • Wed, Jul. 29, 2:59 PM
    • AMD is among the tech standouts on a day the Nasdaq is up 0.5%. 17M shares have been traded thus far, topping a 3-month daily average of 15.6M.
    • M&A speculation - it wouldn't be the first time - has been mentioned as a potential reason for the jump. Profit-taking by shorts could also be at work: 153.2M shares (24% of the float) were shorted as of July 15.
    • The CPU/GPU vendor remains down 27% YTD. Shares fell two weeks ago after AMD provided light Q3 guidance to go with its Q2 results.
    | Wed, Jul. 29, 2:59 PM | 106 Comments
  • Fri, Jul. 17, 2:39 PM
    • Up in AH trading yesterday after posting Q2 results (in-line with what was expected after a July 6 warning) and issuing soft Q3 guidance, AMD has sold off to fresh multi-year lows today. Sell-side reactions to the numbers are generally subdued or critical.
    • Susquehanna's Chris Caso: "AMD’s report strikes a pattern similar to that which the company has followed over the last four years. After shockingly poor results in 1H, we expect significant opex cuts to follow in order to eliminate the cash burn, and keep AMD out of bankruptcy. But we would argue that the constant declines in R&D spending have likely been a significant contributor to the subsequent revenue cuts. R&D spending is down about 40% since 2011, about the same amount that revenue has declined..."
    • Caso doesn't see any way out of this cycle save for a major restructuring of AMD's $2.27B debt load. "[W]e consider the stock to be in no-man’s land – too low to short, but with no compelling thesis to recommend a long position."
    • BofA/Merrill's Vivek Arya raises similar concerns about the impact of AMD's cost cuts on its ability to compete against peers with more resources (read: Intel and Nvidia). He also calls Q3 cash burn guidance of ~$130M "uncomfortably high," and suggests AMD's strategy of simultaneously servicing the CPU, GPU, semi-custom, and embedded markets is "unrealistic."
    • On the CC (transcript), CEO Lisa Su mentioned AMD began development of a new semi-custom design in Q2,  and saw "good initial demand" for its recently-launched Fury X and 300 series GPUs. Q3 is once more expected to represent an annual peak for console processor shipments, and the ramp of AMD's Carrizo platform is seen providing a 2H15 lift to depressed notebook CPU sales.
    • AMD's Q2 results, guidance/details
    • Three months ago: AMD's business model, long-term outlook questioned after Q1 miss
    | Fri, Jul. 17, 2:39 PM | 65 Comments
  • Thu, Jul. 16, 4:37 PM
    • Though officially missing consensus, AMD's Q2 revenue of $942M (-8% Q/Q and -35% Y/Y) matched the guidance provided in its July 6 warning. Q3 guidance is for revenue to rise 6% Q/Q (+/- 3%). That implies a midpoint of $998.5M (-30% Y/Y), below a $1.05B consensus.
    • Segment performance: Computing and Graphics sales (hurt by PC weakness and CPU/GPU share loss) fell 29% Q/Q and 54% Y/Y to $379M; the division had a $147M op. loss. Enterprise, Embedded, and Semi-Custom revenue rose 13% Q/Q (higher console APU sales) and fell 8% Y/Y (lower server CPU and engineering revenue) to $563M; the division had a $27M op. profit.
    • Financials: As forecast in the warning, gross margin fell to 28% from 32% in Q1 and 35% a year ago. Job cuts kept a lid on losses: GAAP R&D spend fell 15% Y/Y to $235M, and MG&A spend 13% to $134M. AMD ended Q2 with $829M in cash (down $77M Q/Q), and $2.27B in debt.
    • AMD +2.1% AH to $1.91. With shares down over 50% from where they traded last summer, a lot had already been priced in.
    • Q2 results, PR, CFO commentary (.pdf), slides (.pdf)
    | Thu, Jul. 16, 4:37 PM | 22 Comments
  • Wed, Jul. 15, 5:19 PM
    • Intel (up 2.4% AH) beat Q2 estimates and provided better-than-expected Q3 and full-year guidance. The chip giant reported a 14% Y/Y drop in PC/mobile CPU division sales, and a 10% increase in server CPU division sales.
    • Various names with PC and/or server exposure are following Intel higher. HP (NYSE:HPQ) +1.2% AH. Micron (NASDAQ:MU) +2.2%. AMD +2%. Nvidia (NASDAQ:NVDA) +1.3%. Mellanox (NASDAQ:MLNX) +1%.
    • Micron fell 3.7% in regular trading, after having surged yesterday on a WSJ report about a buyout offer from China's Tsinghua Unigroup. John McCain let it be known today he isn't thrilled with the idea of a Chinese company acquiring "the last major American manufacturer of memory chips."
    • AMD is 9 days removed from plunging on account of a Q2 warning. The Intel rival's Q2 report arrives tomorrow.
    | Wed, Jul. 15, 5:19 PM | 13 Comments
  • Tue, Jul. 7, 9:14 AM
    | Tue, Jul. 7, 9:14 AM | 5 Comments
  • Mon, Jul. 6, 4:41 PM
    • After coming off a halt, AMD has fallen to $2.23 in AH trading in response to its Q2 warning.
    • Shares are close to a 52-week low of $2.14, and down 16% YTD.
    • Update: AMD closed AH trading down 13.8% to $2.13, creating new 52-week lows along the way.
    | Mon, Jul. 6, 4:41 PM | 74 Comments
  • Mon, Jul. 6, 4:20 PM
    • AMD now expects Q2 revenue to be down 8% Q/Q, worse than prior guidance for a 3% drop (+/- 3%) and a consensus for revenue to fall 3% to $1.00B. The company primarily blames "weaker than expected consumer PC demand impacting the company's Original Equipment Manufacturer (OEM) APU sales." (Press Release)
    • Gross margin (non-GAAP) is expected to be at 28%, below prior guidance of 32% and down from Q1's 32%. AMD blames both lower PC APU volumes and a mix shift towards enterprise, embedded, and semi-custom chip sales.
    • AMD also forecasts a $33M GAAP charge related to migrating several designs previously set to use a 20nm manufacturing process to FinFET processes (presumably at 14nm or 16nm). The Q2-ending cash balance is expected to be $830M, down from Q1's $906M and in-line with expectations.
    • Shares have been halted. Full Q2 results arrive on July 16. A fair amount of PC-related bad news has already been priced in.
    • Update (4:42PM ET): After resuming trading, AMD is down 9.7% AH.
    | Mon, Jul. 6, 4:20 PM | 41 Comments
  • Mon, Jun. 29, 11:22 PM
    • KitGuru, not a site with a long track record of delivering M&A scoops, reports (citing a source) Microsoft (NASDAQ:MSFT) "may acquire" AMD.
    • It adds Microsoft approached AMD, which provides the APU for both the Xbox One and PS4, about a buyout several months ago, and that "the result of the talks is unclear."
    • AMD rose 3% in AH trading to $2.41 on the rumor, after having fallen 5.3% in regular trading thanks to a broad market rout. Shares also fell sharply on Friday, following Micron's results/guidance.
    • Back in 2012, BSN reported Intel is thinking of acquiring Nvidia and making Nvidia chief Jen-Hsun Huang its next CEO. That rumor didn't quite pan out.
    | Mon, Jun. 29, 11:22 PM | 67 Comments
  • Fri, Jun. 26, 1:28 PM
    • AMD is posting steep losses after Micron missed estimates and provided soft guidance; weak PC sales, related DRAM price pressure, and a manufacturing process transition were blamed. GPU archrival Nvidia (NASDAQ:NVDA) is off more moderately, as are Intel and various other PC and/or chip-related names.
    • AMD's selloff comes at the end of a week that has seen solid, but not quite glowing, reviews for the company's recently-launched, top-of-the-line, Fury X GPU. Gaming benchmarks generally show the water-cooled Fury X ($649 graphics card MSRP) slightly trailing Nvidia's GTX 980 Ti (also recently launched and priced at $649) in 2K and 1080p tests, but beating it in some 4K tests.
    • The 980 Ti is still seen as having an edge in overclocking and power consumption, though the Fury X is deemed much-improved over prior high-end AMD GPUs in the latter area. The consensus: The Fury X won't deliver a knockout blow for AMD, but once more makes it competitive on the (lucrative) high-end. Ars Technica: "It's been a while, but the GPU market just got interesting again."
    | Fri, Jun. 26, 1:28 PM | 42 Comments
  • Tue, Jun. 9, 9:59 AM
    • With Intel very likely to renew the company's x86 instruction set license, AMD (AMD +0.6%) is a prime takeover target for Chinese buyers, argues Northland Securities. Northland, which has launched coverage with an Outperform rating and $5 target, also considers Xilinx a potential suitor in the wake of the Intel-Altera deal.
    • In addition, Northland is upbeat about AMD's efforts to narrow Intel's tech lead in the coming years, and thinks the company's GPU offerings leave it well-positioned for the budding virtual reality market - Nvidia is also going after the opportunity.
    • AMD is up modestly following the launch. Rumors about Chinese M&A interest have popped up before.
    | Tue, Jun. 9, 9:59 AM | 90 Comments
  • Fri, Apr. 17, 6:51 PM
    • "AMD’s model appears to be breaking, as we now have them burning substantial amounts of cash," writes Bernstein's Stacy Rasgon, reiterating an Underperform following the CPU/GPU vendor's Q1 miss and soft Q2 guidance. "Frankly, this call is getting depressing. But, we see little reason to step off of it."
    • Rasgon doesn't see AMD going bankrupt (no major debt payments are due before 2019), and likes its improved inventory management. But he also thinks the company will be in "serious trouble" if PC demand doesn't stabilize later this year thanks to improved inventories and Windows 10.
    • He also notes AMD's 20% Q/Q and 38% Y/Y PC CPU/GPU division sales drops compare with 16% Q/Q and 8% Y/Y drops for Intel's PC/mobile CPU unit. "This continues to suggest continued share losses by the company (though this should hardly be shocking at this point)."
    • Ascendiant's Cody Acree, who downgraded to Hold: "In addition to a relatively weak macro computing environment, we believe AMD’s gross and operating margin leverage will likely also be constrained. We believe CPU and GPU pricing from both INTC and NVDA will continue to be aggressive and that AMD’s semi-custom business will only support modestly higher margins as pricing declines meet console volume increases."
    • Though maintaining an Outperform for now, Wells Fargo's David Wong now forecasts losses for the rest of 2015, and also through 2016. He sees profits eventually returning on account of AMD's engineering expertise. Oppenheimer notes gross margin (down in Q1) is expected to be flat Q/Q in Q2, and thinks new semi-custom wins are unlikely to ramp before 2H16.
    • Jefferies' Mark Lipacis (Buy) is hoping improved PC/console demand and the launch of AMD's anticipated Fiji GPUs provide a 2H15 lift. He also expects AMD to use its May 6 analyst day to "articulate its first long-term strategy and business model in years."
    • Shares fell 10.3% in regular trading to $2.58. The 52-week low is $2.14.
    • Yesterday: AMD's Q1 results, guidance/details
    | Fri, Apr. 17, 6:51 PM | 22 Comments
  • Fri, Apr. 17, 12:45 PM
    | Fri, Apr. 17, 12:45 PM | Comment!
  • Fri, Apr. 17, 9:21 AM
    | Fri, Apr. 17, 9:21 AM | Comment!
  • Thu, Apr. 16, 4:56 PM
    • In addition to missing Q1 estimates, AMD is guiding for Q2 revenue to be down 3% Q/Q (+/- 3%). That implies a range of $970M-$1.03B, below a $1.13B consensus.
    • The company also announces it's "exiting" its high-density server business, the fruits of its $334M 2012 acquisition of SeaMicro. No word yet on whether AMD is seeking a buyer for SeaMicro, which has faced direct competition from HP (via its Moonshot servers) and indirect competition from the do-it-yourself hyperscale efforts of Internet giants. $75M worth of charges were taken in Q1.
    • Computing/graphics segment (PC CPU/GPU) revenue fell 38% Y/Y in Q1 to $532M (PC weakness, share loss). PC CPU ASPs fell Q/Q and rose Y/Y. GPU ASPs rose Q/Q and fell Y/Y. The division had a $75M op. loss.
    • Enterprise/embedded/semi-custom revenue (includes console APUs) fell 7% Y/Y to $498M due to lower server CPU sales (share loss). The division had a $45M op. profit.
    • Gross margin (non-GAAP) remained under pressure, dropping to 32% from Q4's 34% and Q1 2014's 35%. Cost cuts led R&D spend to drop 13% Y/Y to $242M, and MG&A spend to fall 16% to $131M. AMD ended Q1 with $906M in cash (down $134M Q/Q) and $2.27B in debt (up $56M Q/Q).
    • Shares have fallen to $2.63 AH. They rose 6.3% in regular trading ahead of earnings.
    • Q1 results, PR, CFO commentary (.pdf), slides (.pdf)
    | Thu, Apr. 16, 4:56 PM | 59 Comments
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Company Description
Advanced Micro Devices Inc is a semiconductor company with facilities around the world. It operates in two segments: Computing Solutions and Graphics and Visual Solutions.