What Happened At AMD Yesterday? Wedbush Is Here To Answer

Shares of Advanced Micro Devices, Inc. (NASDAQ: AMD) tumbled more than 10 percent during Monday's after-hours session after the company issued weak guidance for the second quarter.AMD said that it expects its second quarter sales to fall 8 percent after previously guiding for a 3 percent decline. The company also said it expects its gross margins to be 28 percent, down from its previous guidance of 32 percent. The company expects to record a $33 million one time charge.In a report published Tuesday, Wedbush analyst Betsy Van Hees noted that the company's negative guidance "wasn't surprising" given the weak consumer PC market, continued share losses to Intel Corporation (NASDAQ: INTC) and ongoing company specific inventory work through issues at OEMs and the channel."We believe AMD is on the right track, but reiterate that this is a multi-quarter transition and investors should remain on the sidelines until there is visibility on embedded design wins and stabilization of core PC business," Van Hees wrote.Van Hees also noted that AMD's guidance "wasn't all bad news" as the company highlighted that its second quarter cash and cash equivalents are expected to read $830 million – a figure that is in-line with what analysts were expecting.As a result of the revised guidance, the analyst lowered her second quarter revenue estimate to $947 million from a previous $999 million. For the full year, revenue is now estimated to be $4.159 billion (marking a 24.5 percent decrease from the previous year), down from a previous $4.428 billion.Van Hees also lowered her second quarter earnings per share estimate has been slashed to a loss of $0.17 from a previous estimate of a loss of $0.10 per share. For the full year, the company is now expected to lose $0.42 per share versus a prior estimate of $0.18 per share.Shares remain Neutral rated with a price target lowered to $2.25 from a previous $2.50.