Advanced Micro (NYSE: AMD) delivers high performance products through four divisions: Processors, ATI Products, Embedded Solutions and Support & Drivers.
Abu Dhabi purchased a $622 million dollar stake in AMD in November 2007.
AMD option volume was heavy on May 6 with 130,784 contracts trading. AMD May option implied volatility is at 68; June is at 50; below its 26-week average of 74 according to Track Data, suggesting decreasing price movement.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Cymer (Nasdaq: CYMI) makes excimer light sources for manufacturers of photolithography tools in the semiconductor equipment industry. It offers field support products, customized to support chipmaker customers in their advanced wafer patterning processes. It also provides deep ultraviolet light sources to lithography tool makers, who integrate the sources into their wafer steppers and scanners for subsequent sale to chipmakers. Cymer has installed more than 3,000 light sources around the world, in plants run by the likes of Advanced Micro Devices (NYSE: AMD), IBM (NYSE: IBM), Intel (NASDAQ: INTC) and Texas Instruments (NYSE: TXN).
Investors were pleased earlier in the week, when the firm announced a $100 million buyback program and then issued a solid quarterly summary. Cymer reported Q1 EPS of 41 cents and revenues of $124 million. Analysts had been looking for 35 cents and $119.3 million. Management also said Q2 revenues would be comparable to the Q1 total of $124 million ($116.6M consensus) and that gross margins would hold at approximately 48%.
The mood this week has changed sharply from the post-GE disappointment, despite weak economics still hitting the screens every morning in economic numbers. In fact, the week went much better than it was looking on Monday, and everyone remembered the old chant, "markets climb up a wall of worry." Even oil heading above the $116 per barrel isn't killing things. Here are unofficial closing levels:
Advanced Micro Devices Inc. (NYSE: AMD) down after reporting a net loss of $358 million on $1.5 billion in revenues. Losses were narrowed from the same quarter last year. The company also released plans to cut additional cost. If insiders want that stock to go up, they need to fire Hector Ruiz. Shares were down 1.6% at $6.09 going into the close.
The Wall Street Journal reported that New York state's attorney general, Andrew Cuomo, has launched an investigation into auction-rate securities and is seeking information from some of Wall Street's biggest institutions including UBS AG (NYSE: UBS), Citigroup Incorporated (NYSE: C) and Merrill Lynch & Co Inc (NYSE: MER), a person familiar with the matter said.
According to the Financial Times, Deutsche Bank AG (NYSE: DB) and other investment banks are working on plans to develop a clearing house for the credit derivatives markets. In an attempt to reduce counterparty risk, the banks are trying to develop a system that would only allow institutions with strong capital bases and credible trading histories to clear trades in the credit default swap markets with a central counterparty.
OTHER PAPERS:
The news that The Royal Bank of Scotland Group Plc (NYSE: RBS) is planning a rights issue of between GBP5B and GBP12B received mixed reviews from British analysts and investors, the Telegraph reported. The analysts expect the bank to cut its dividend.
AMD (NYSE:AMD) announced its sixth straight loss. For the first quarter of 2008, the company reported a net loss of $358 million, or 59 cents a share, compared with a net loss of $611 million, or $1.11 a share, for the year-earlier period.
MarketWatch writes "Revenue was $1.5 billion, up from $1.23 billion for the year-ago period. Analysts had expected the chipmaker to report a loss of 48 cents a share on revenue of $1.52 billion, according to FactSet Research."
The company's survival as an independent company remains at stake. The firm said that second quarter results would be down.
AMD still carries long-term debt of over $5 billion and with operating losses it remains difficult to see how the company can attack an amount of that magnitude while still investing aggressively in R&D. Larger rival Intel (NASDAQ:INTC) has the balance sheet and cash flow to continue to launch new chips, many of which have features superior to those of AMD products.
AMD may have only two choice now. One would be to sell the company to a more successful chip operation like Nvidia (NASDAQ:NVDA). The other is to auction off its graphics chip operation ATI, and hope that it can get enough money to help take down a large portion of its long-term debt obligations.
Either way, AMD is unlikely to look that same as it does now by the end of the year.
Douglas A. McIntyre is an editor at 247wallst.com.
Ever since Intel (NASDAQ: INTC) announced that it had plans to partner with Apple (NASDAQ: AAPL), there has been a steady and rather disconcerting direction seen for Advanced Micro Device shares.
The real question is: Is it a buy into earnings? As that insightful financial analyst Borat would say: Ish no think so....
Goldman Sachs has continued its stance on AMD as a SELL: (4/8/08)
AMD downwardly revised its Q108 revenue guidance on Monday after the market close due to lower than expected sales across all business segments. The company now expects Q108 revenues to be -15% qoq or $1.5bn versus its previous expectation that Q108 revenues would be in-line with normal seasonality of -5% to -10% qoq. Additionally, AMD will be implementing a 10% workforce reduction by the end of Q308. We are reducing our estimates on lower revenues: CY08 goes to -$2.20 from -$1.65; CY09 goes to -$1.30 from -$0.75; CY10 goes to -$0.30 from $0.40.
In addition, there is an overriding concern that there has been a continual burn-rate that has become alarming. Now, AMD is saddled with over $5 billion of debt and only $1 billion of cash. Not the right balance for a tech company. This is even more worrisome as we have been seeing a rise in cash for many within the sector. In a recent WSJ article, Pui-Wing Tam explored some of the rationale as companies hoard money to protect against an economic downturn.
She pointed out a few selected tech companies cash positions as a percentage of assets: (source: WSJ/Strategas) Apple: 62% Google: 57% Cisco :41% Qualcom: 40% eBay:39%
How does AMD compare to that? Not so well ... Goldman goes on further to discuss the idea that at the rate of burn they are seeing, AMD will have no other alternative than to do some type of equity offering. Of course this will not be taken well by shareholders who will see further dilution of their holdings. I wonder why investors would buy shares anyway, unless they are hoping for a miraculous buyout/rescue.
Although, there the is the odd notion that Wall Street does not seem to care much if companies are in hock up to their eyebrows. In fact, in this market, AMD could actually thrive as investors are giving a pass to many companies with worse news and outlooks. Even so, while you just have to wonder how much worse it can get, I would not be involved here since there are plenty of other names that seem to have a much better outlook.
Disclosure: Horowitz & Company clients do not hold positions of AMD as of the date of publish. BUT, they do have LONG positions in MSFT, APPL and INTC.
Intel Corp. (NASDAQ: INTC) slightly beat consensus: Q1 revenue was slightly ahead ($9.67 billion vs. $9.63 billion consensus). EPS was $0.25, but asset impairment, restructuring charges, and tax rate were higher than expected, so operating EPS was stronger than consensus. June revenue outlook in-line, full-year margin outlook slightly better than expected. Stock up strong in aftermarket.
Key points
Microprocessor and chipset businesses as expected. Microprocessor units lower sequentially, with ASP flat. * NAND revenue flat as significant price declines offset unit growth.
Gross margin: 53.8%, slightly below consensus of 54%.
Tax rate slightly higher than expected: 33.5% vs. 31%, and restructuring and asset-impairment charges $329 million vs. $100 million estimate. Operating income stronger than appears.
Advanced Micro Devices Inc. (NYSE: AMD), the maker of chips for PCs and servers, lost its chief technology officer yesterday. At a hardware company, it could be argued that the CTO is as important, if not more important, than the CEO. AMD recently announced another round of lay-offs, this time cutting 10% of its workforce. The firm also said its Q1 numbers would be disappointing.
According to The Wall Street Journal (subscription required), Phil Hester "has been closely associated with an AMD strategy known as 'accelerated computing,' which envisions the use of special-purpose circuitry being used on chips along with general-purpose microprocessors." To put it another way, he is one of the masterminds behind AMD's plans to compete with larger rival Intel Corp. (NASDAQ: INTC).
Each piece of news out of AMD makes the company look more like a restructuring candidate. It is hard to see why Hester would leave if he thought things were turning around. AMD has more than $5 billion of debt, most of it from buying graphics chip company ATI. The company's shares traded near their 52-week low. The firm's new forecasts may indicate that AMD will have trouble generating sufficient cash flow to service its debt.
Did someone mention Chapter 11?
Douglas A. McIntyre is an editor at 247wallst.com.
Stock futures were lower this morning, indicating the beginning of what could be another down day on Wall Street as more troubling news from the financial industry was reported, while UPS warned of a slowdown in its delivery business.
On Tuesday, U.S. stocks ended lower following a revenue warning from Advanced Micro Devices (NYSE: AMD), a lackluster earnings report from Alcoa Inc. (NYSE: AA), a dividend cut from Washington Mutual (NYSE: WM) and the Federal Reserve minutes, all of which affecting investors' sentiment. The Dow industrials closed 35 points lower, or 0.29%, the S&P 500 lost 7 points, or 0.51%, and the Nasdaq Composite dropped 16 points, or 0.68%.
This morning, given the very light economic calendar consisting of February wholesale inventories at 10:00 a.m. EDT, the Street will likely focus -- once again -- on the troubles in financials. The top story on the Wall Street Journal is about the options the Fed is considering to alleviate the credit crunch further including "contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail." While such plans aren't surprising and even welcome, the report comes after the Fed showed concern the economic downturn could last into 2009 when it released Tuesday the minutes of its FOMC meeting.
If you wanted to look for the blame-game on why stocks listed lower most of the day, you could blame pending home sales at lows, higher oil prices, and even the FOMC minutes hinting at recession without saying "recession." We also saw the White House say it couldn't endorse the current structure of the proposed housing bill.
The truth is, Wall Street and Main Street are also coming to grips with the fact that we are about to get earnings (and guidance) from companies that we can only hope is mixed. Otherwise we just have to hope for "less-bad" news. Get ready for the legacy airline sector's low P/E and low Price to Book values to disappear completely. Below are the unofficial closing bell index prices:
Advanced Micro Devices (NYSE: AMD) saw shares fall almost 5% to $6.03 after it issued an earnings and revenue warning on Monday after the close. Had it not announced a major layoff plan, this would have been far worse. So much for this "growth story."
Most technology stocks are being dragged down again today after a gloomy statement from Advanced Micro Devices Inc. (NYSE: AMD) stirred new worries over the tumbling economy. Novellus Systems Inc. (NASDAQ: NVLS) is joining the market anxiety after issuing a warning related to its earnings numbers. The company slashed its first-quarter earnings outlook, and said it expects revenues at the low end of the earlier expected range.
The semiconductor equipment maker now expects first-quarter earnings in a range between 15 cents and 17 cents per share, down from its previous range of 21 to 24 cents. Quarterly revenues are expected to be at the low end of the previously communicated range of $315 million and $325 million. Analysts were waiting for Novellus Systems show quarterly earnings of 23 cents a share on sales of $319.4 million, according to Reuters Estimates.
Advanced Micro Devices (NYSE: AMD) lowered its outlook for 1Q08 due to lower than expected sales across all business lines.
AMD also indicated it plans to reduce 10% of its headcount by the end of 3Q08.
Jeffries & Co says: "The difficult transition to 45-nanometer geometry and large net debt position cause us to maintain our Hold rating and $7 price target."
Abu Dhabi purchased a $622 million dollar stake in AMD in November 2007.
AMD overall option implied volatility of 73 is above its 26-week average of 67 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Beware Charging at the Supermarket Supermarkets have long employed tricks aimed at luring shoppers into spending more, such as doling out free samples or stationing the most expensive sugar cereals right at a toddler's eye level. Now, as shoppers struggle to get their escalating grocery bills under control, the credit-card companies are throwing one more temptation their way: grocery store rewards cards. Here are the three things you should consider before applying for a grocery rewards card. Plus: the three best rewards cards today. Grocery Rewards Cards Often Aren't Worth It - SmartMoney.com
Advanced Micro (NYSE: AMD) delivers high performance products through four divisions: Processors, ATI Products, Embedded Solutions and Support & Drivers. 
Here are some highlights from this past week's 
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AMD 
Intel Corp.
Stock futures were lower this morning, indicating the beginning of what could be another down day on Wall Street as more troubling news from the financial industry was reported, while UPS warned of a slowdown in its delivery business.
Most technology stocks are being dragged down again today after a gloomy statement from 
Advanced Micro Devices
Oil hits record $127.43 on supply concerns, raised Goldman forecast
Icahn's 'shock and awe' on Yahoo -- a gutsy play
Housing starts surprisingly rise in April on apartment construction
