Deutsche Bank Expects In-Line 3Q Results For Advanced Micro Devices

In a report published Wednesday, Deutsche Bank analyst Ross Seymore reiterated a Hold rating and $3.50 price target on

. In the report, Deutsche Bank noted, “We model AMD's 3Q14 revs/EPS at $1.48b (+3% q/q)/$0.04, roughly in-line with Street's $1.47b (+2% q/q)/$0.04 and mid-pt of guidance (-1 to +5% q/q), but below typical 3Q seasonality of +9% q/q. We believe the lack of negative preannouncement in conjunction with the CEO change last week suggests that 3Q are likely in-line. Note that AMD will be adjusting its segment rev/OP segment reporting to consolidate to two primary segments, Computing and Graphics segment (CGS) and Enterprise, Embedded and Semi-Custom segment (EESS), so comparability to historical data will be less clear. Utilizing the prior segment definitions, we believe AMD's Computing Solutions Group (CSG) will not grow as well as Intel's PC Client Group (PCG) did in 3Q (INTC reported +6% q/q and up 9% y/y) given AMD's low enterprise exposure and Intel's increased penetration in the low end consumer market. We model CSG flat q/q and Graphics (GVSG) down -5% q/q. Offsetting that is the continued growth of Game Console SoC, which we estimate to grow +12% q/q. We see GM marginally up (+40bps q/q) at 35.0% and opex up $4m q/q to $435m.” Advanced Micro Devices, Inc. closed on Tuesday at $2.62.