Q3 Preview: Advanced Micro Devices (AMD) Aims to Exceed Lowered Expectations (AAPL, NVDA, ARMH, INTC)
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Provision (benefit) for income taxes: 4M
Today's EPS Names:
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Financial Fact:
Provision (benefit) for income taxes: 4M
Today's EPS Names:
EDXC, BICX, FBPI, More
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Advanced Micro Devices (NYSE: AMD) is trading lower ahead of its third quarter earnings report, expected after the market closes today, October 14, 2010. Shares are down 1.5% in the afternoon session.
The company is expected to report EPS of $0.06 on revs of $1.61 billion. For the second quarter, the company had adjusted EPS of $0.11 on revs of $1.65 billion, both topping views. Last year, in Q309, AMD posted an adjusted loss of $0.25 and revs of $1.396 billion, compared to the consensus loss of ($0.42) per share and revs of $1.26 billion.
Shares of the company fell 3.8% through the quarter to end at $7.11 on September 30, 2010. The stock is down 26% since the start of 2010, compared to a 3.8% gain on the S&P 500 for the same period.
For a simple valuation, the stock is trading for an forward EPS of 19.9x FY10 EPS estimates, compared to 48x for ARM Holdings plc (Nasdaq: ARMH), 9.9x for Intel (Nasdaq: INTC), and 19.7x for NIVIDA (Nasdaq: NVDA).
Data from Bloomberg has 7 analysts with a Buy, 19 saying to Hold, and seven recommending to Sell. The analyst price target consensus is $7.93, with a high of $13, and a low of $4.25.
Analyst Ratings Through the Quarter
In July, FBR Capital downgraded the shares from Outperform to Market Perform, and lowered their price target from $14 to $11.
In August, Barclays downgraded the shares from Overweight to Equal Weight, with a $9 price target.
September saw Auriga lowering their price target on the shares from $6 to $5. They see AMD underperforming competitors on a fundamental as well as share price basis over the next year.
Gleacher & Co. also cut their price target in September, from $16 to $12, while maintaining a Buy rating on the shares.
Summary
At the end of September, AMD put out a bleak press release stating that they were cutting their third quarter sales forecast, stating that they now see revs to fall 1% to 4% from the second quarter, compared to a prior outlook for sales up be up seasonally about 5% - 10% Q/Q. This was not a surprise as larger rival Intel (Nasdaq: INTC) lowered their guidance in August.
Goldman Sachs didn't change their outlook following AMD's lowered guidance, saying that it was widely expected following Intel's negative pre-announcement. The have a Sell rating on the shares, noting the Apple's (Nasdaq: AAPL) iPad will cannibalize the PC market, and AMD's limited exposure to the tablet market. They see Intel taking high-end server space from AMD in 2011, crunching margins.
Wedbush sees results to be relatively in-line with the preannouncement, given that it came in later in the quarter (September 23, 2010). They are looking for an update to 32nm progress, specifically with the Llano product. They note that, according to their checks, margins have improved over the last few months with plans for volume shipments by June 2011. They see revs coming in at $1.587 - $1.636 billion, based on the revised outlook from AMD. Wedbush has a Neutral rating on the shares, and $7 price target.
Keep in mind that AMD has surpassed Street estimates over the last several quarters, though the stock doesn't necessarily twitch one way or the other following the results.
Gross margins for the company over the last several quarters are as follows: Q210: 44.7%; Q110: 47.1%, Q409: 45%; Q309: 42%; Q209: 37.3%, Q109: 43.4%.
Advanced Micro Devices is expected to release their Q310 earnings on Thursday, October 14, 2010, at approximately 4:15pm EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
The company is expected to report EPS of $0.06 on revs of $1.61 billion. For the second quarter, the company had adjusted EPS of $0.11 on revs of $1.65 billion, both topping views. Last year, in Q309, AMD posted an adjusted loss of $0.25 and revs of $1.396 billion, compared to the consensus loss of ($0.42) per share and revs of $1.26 billion.
Shares of the company fell 3.8% through the quarter to end at $7.11 on September 30, 2010. The stock is down 26% since the start of 2010, compared to a 3.8% gain on the S&P 500 for the same period.
For a simple valuation, the stock is trading for an forward EPS of 19.9x FY10 EPS estimates, compared to 48x for ARM Holdings plc (Nasdaq: ARMH), 9.9x for Intel (Nasdaq: INTC), and 19.7x for NIVIDA (Nasdaq: NVDA).
Data from Bloomberg has 7 analysts with a Buy, 19 saying to Hold, and seven recommending to Sell. The analyst price target consensus is $7.93, with a high of $13, and a low of $4.25.
Analyst Ratings Through the Quarter
In July, FBR Capital downgraded the shares from Outperform to Market Perform, and lowered their price target from $14 to $11.
In August, Barclays downgraded the shares from Overweight to Equal Weight, with a $9 price target.
September saw Auriga lowering their price target on the shares from $6 to $5. They see AMD underperforming competitors on a fundamental as well as share price basis over the next year.
Gleacher & Co. also cut their price target in September, from $16 to $12, while maintaining a Buy rating on the shares.
Summary
At the end of September, AMD put out a bleak press release stating that they were cutting their third quarter sales forecast, stating that they now see revs to fall 1% to 4% from the second quarter, compared to a prior outlook for sales up be up seasonally about 5% - 10% Q/Q. This was not a surprise as larger rival Intel (Nasdaq: INTC) lowered their guidance in August.
Goldman Sachs didn't change their outlook following AMD's lowered guidance, saying that it was widely expected following Intel's negative pre-announcement. The have a Sell rating on the shares, noting the Apple's (Nasdaq: AAPL) iPad will cannibalize the PC market, and AMD's limited exposure to the tablet market. They see Intel taking high-end server space from AMD in 2011, crunching margins.
Wedbush sees results to be relatively in-line with the preannouncement, given that it came in later in the quarter (September 23, 2010). They are looking for an update to 32nm progress, specifically with the Llano product. They note that, according to their checks, margins have improved over the last few months with plans for volume shipments by June 2011. They see revs coming in at $1.587 - $1.636 billion, based on the revised outlook from AMD. Wedbush has a Neutral rating on the shares, and $7 price target.
Keep in mind that AMD has surpassed Street estimates over the last several quarters, though the stock doesn't necessarily twitch one way or the other following the results.
Gross margins for the company over the last several quarters are as follows: Q210: 44.7%; Q110: 47.1%, Q409: 45%; Q309: 42%; Q209: 37.3%, Q109: 43.4%.
Advanced Micro Devices is expected to release their Q310 earnings on Thursday, October 14, 2010, at approximately 4:15pm EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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