FBR Capital Maintains a 'Market Perform' on AMD (AMD); PC Checks Still Sluggish, but AMD May Benefit from Intel Recall Issue

March 31, 2011 6:57 AM EDT
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FBR Capital maintains a 'Market Perform' on AMD (NYSE: AMD), PT $10.

FBR analyst says, "Checks with the top six notebook ODMs have deteriorated of late, with 1Q notebook builds downticking slightly from –10.5% QOQ to –11% QOQ, and with 2Q builds downticking from an optimistic +15% QOQ (which we said was likely to be reduced) to +7% QOQ, worse than expected. While notebook demand could improve, and builds could get ratcheted up by June, our contacts suggest Intel's Sandy Bridge products are not stimulating as much end demand as expected, likely impacting AMD too. For AMD, we think 1Q11 revenues tracked at or above the high end of guidance of flat to slightly down QOQ (versus $1.65B in 4Q and versus the Street's $1.62). That said, original revenue guidance may have been too optimistic with notebook builds set to fall 11% QOQ in 1Q, and with desktop builds likely to fall by 5%–7% QOQ. So, if AMD does achieve the high end of revenue guidance, or potentially better, the upside is likely short term in nature and due to customers turning to AMD for product when Intel's Sandy Bridge was less available due to the chipset bug recall. For 2Q, we think AMD's revenues will fall QOQ given its 14th week in 1Q, Intel (Nadaq: INTC) chipset goodness unwinding, and sluggish desktop builds, still rather unexciting.

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Analyst Comments


Q1 impacted by non-recurring events
Catalina588 on 2011-04-01 10:55:16
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1. Sandy Bridge anticipation
2. Sandy Bridge chipset hiccup
3. Channel normalization around delayed SB intro and Japan earthquake supply effects
4. Tablets continue to eat netbook low end.


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