Bernstein On AMD: 'Les Miserables'

In a report published Friday, Bernstein analysts maintained an Underperform rating on

, with a price target of $1.50 Advanced Micro Devices reported its 1Q15 revenue at $1.03B, short of the guidance and consensus. At -$0.09, pro-forma EPS was 4 cents short. The company disappointed especially in gross margins, which came in at 31.7 percent, versus consensus and guidance of 34 percent. "AMD's computing-related revenues once again came in below recent reports from peers, as well as market data," the analysts noted. Advanced Micro Devices' Q2 guidance points towards a "worsening" situation, as the company "continues to flush inventory in front of new product launches and the back-half Windows 10 launch." In the report Bernstein noted, "AMD's model appears to be breaking, as we now have them burning substantial amounts of cash. The company is looking for a stronger back half in the wake of channel normalization and the Windows 10 launch (similar to Intel). However, if Intel's back half doesn't materialize, they will be displeased. If AMD's back half does not come through, they will be in serious trouble." The revenue estimates for 2015, 2016 and 2017 have been reduced from $4,518 million to $4,143 million, from $4,683 million to $4,125 million, and from $4,712 million to $4,301 million, respectively. The pro-forma EPS (excluding share-based compensation) estimates for 2015, 2016 and 2017 have been reduced from -$0.09 to -$0.32, from -$0.09 to -$0.26, and from -$0.12 to -$0.16, respectively.