AMD (AMD): Notes From Investor Meetings In Europe - Wells Fargo

Wells Fargo analyst, David Wong, hosted a number of investor meetings in Dublin, Milan, Switzerland, and London with AMD's (NYSE: AMD) CEO Lisa Su and Senior Vice President Ruth Cotter. He expects that over the next several quarters AMD will be able to continue the market share and balance sheet progress that has become evident in recent reports.

AMD has focused its product development efforts on a number of key projects over the last two years. AMD expects to introduce its next generation GPU (graphics processing unit) 14nm Polaris family mid-2016 with revenues ramping from these products in 2H 2016. AMD expects to begin sampling its 14nm Zen server processors to selected customers in the current (June) quarter and ramp revenues from these products in 2017. In addition to its current two semi-custom products for game consoles, AMD expects revenues from its new semi-custom business to begin in 2H 2016.

AMD has entered into two joint venture arrangements recently which have already brought more than $300 million dollars into the company, with more cash expected as AMD meets various milestones with its x86 server processor joint venture in China. AMD expects to exit the June 2016 quarter with about $950 million in gross cash on its balance sheet. As its balance sheet builds, the company plans to apply cash balances in excess of $1 billion towards paying down debt.

AMD's long-term targets include gross margin of 36-40%, operating margin of more than 10%, and free cash flow roughly equal to net income. We think these are realistic goals which the company is likely to achieve by continuing to execute on its current strategy.

No change to Outperform rating.

For an analyst ratings summary and ratings history on AMD click here. For more ratings news on AMD click here.

Shares of AMD closed at $3.87 yesterday.

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