Analysts lower expectations for AMD, disclose overly payment for ATI

Theo Valich — Thu, 22 Jan 2009 14:36:15 +0000

AMD will held its quarterly results conference call today at 5PM EST (17:00 EST, 23:00 CET), and unlike conference call for the past quarter, this one will be a hard one.
We’ll list some tidbits from report made by Patrick Wang of Wedbush Morgan Securities. For starters, Wedbush Morgan estimates that AMD will report Q4 revenues of US$ 1.2B, which is 25% down on QoQ basis (excluding the infamous sale of Fab30 equipment to Russians in Q3 results), resulting in a loss of $0.54 per share.

Due to AMD’s shaky position in commercial/enterprise segment, AMD suffered more greatly than Intel did, given the fact that AMD gets 70% of its revenues from consumer segment. As ATI (AMD GPG) gained ground and put pressure on Nvidia, it suffered the blow in the results, but still – don’t expect great results in GPU segment.

When it comes to looking into the crystal ball, Wedbush Morgan is keeping its price target down to $2.00 in the next 12 months (current share price: $2.25). This pessimism is a consequence of almost 10 consecutive quarterly losses and if we want to be honest, AMD didn’t exactly executed well as a company. Some parts did brilliantly, but some parts didn’t do well.

Fab spinoff or MAD AMD is now awaiting Feb10 shareholder vote, and we will probably see the birth of new company at CeBIT 2009.

Given the echo of current economic situation, Wedbush estimates that AMD’s revenue for Q1’09 will be 10-20% lower than current quarter, somewhere in $1.0B range, with further losses. The firm expects that gross margins will “remain under pressure in pricing, mix and minimal 45nm”.

While reading the report, it was interesting to read that AMD has to take additional goodwill impairment charge of $0.62B, bringing the total write-off to 3.2 billion USD. Given the fact that AMD paid 5.4 billion for ATI Technologies, it is more than obvious that CEO at the time, Hector Ruiz did a gross mistake when he overpaid more than three billion for the company. We cannot go into the gory details, but I personally wonder why shareholders didn’t sue AMD leadership when they had the chance… now all is said and done, and there is nothing else but to leave Dirk and his team to fix the company that Hector broke. Sadly, that is too late for many good men that left the company while Hector was in charge.

AMD did introduce temporary pay cuts, reduced its workforce by additional 1100 employees (not 900), probably targeting to once more employ around 15,000 – down from 17,000 at its peak. According to AMD’s Corporate Information, the company currently employs 16,500 people around the globe.

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Time for earning season madness is here!

Theo Valich — Mon, 13 Oct 2008 17:02:05 +0000

In the light of world economy going bonkers, we have entered two really interesting weeks. Intel will submit its Q3 results after the market closes on Tuesday, while AMD will follow suit on Thursday.
I’ve received a preview for both companies from Wedbush Morgan Securities, and in this post you can read estimates researched by Patrick Wang and his assistant Michael Lucarelli. According to Wedbush Morgan, we can expect “weak 3Q results towards the lower end of guidance as the majority of semi companies have not pre-announced but were most likely impacted by the well-documented macro environment.”
With global economy being in chaos, it is no surprise that Wedbush expects that all major semiconductor companies will have to cut 2009 estimates. Patrick states that “utilization will continue its steep decline in 2H08 and into 1H09″.
However, not all is dark – “as estimates come down, we think investors will start feeling more comfortable with traditional valuation metrics and look for stocks with stories that are fundamentally intact but oversold.”. This just might spells good news for semi stocks.
According to Wedbush, Intel will report its Q3 revenue of around $10.15 billion, and profits in the range of around $0.33 per share, down from projected $10.27B with earning per share in the $0.34 range. However, guidance for Q4 is quite conservative, with current estimate being $10.59B (4.4% higher than Q3), below analyst consensus of $10.85B.
When it comes to AMD, Wedbush expects that AMD’s head honchos will be all over Asset Smart/Asset Lite strategy, followed by the positive news of return to profitability. A while ago, while Hector was at the helm of AMD, he made a promise that the company will be profitable in Q3’2008. We cite following part of the report: “we expect AMD to report Q3 revenue and EPS results of $1.46bn / ($0.39) versus consensus of $1.48bn (+10.1% QoQ) / ($0.40).”
So, revenue should be almost 9% up from second quarter, and AMD stock should experience first profit per share in ages – in a tune of almost 40 cents. This resurgence was lead by graphics sales, which rose way above 18% in Q2. AMD pushed Nvidia with its 4800 series of products, and Wedbush now expects that AMD will score Q4 revenue in a tune of $1.57 billion, roughly 15% up from Q2’2008.
I plan to blog from both calls, so stay tuned for news from both camps, and also to see if Wedbush made all the right calls

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Analysts lower expectations for AMD, disclose overly payment for ATI

Time for earning season madness is here!