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AMD's High Cash Burn 'Concerns' Citigroup Analysts

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In a report published Friday, Citi analyst Christopher Danely reiterated a Sell rating on Advanced Micro Devices, Inc. (NASDAQ: AMD), while lowering the price target from $2.00 to $1.50. The analyst expressed concern regarding the continued loss of share and money in AMD's core PC MPU and graphics business, which now has net debt of $1.44 billion.

The company reported disappointing results for 2Q15 on Thursday, while guiding to revenue and margins below the Street expectations for 3Q15, driven by the continuing soft demand and share loss at its Computing and Graphics business.

AMD also reported a 9 percent quarter-on-quarter decline in its Q2 revenue, while the EPS was worse than expected due to increased operating expenses.

"AMD's net debt increased $78.0 million sequentially to $1.44 billion in 2Q15. The company exited 2Q15 with cash and investments of just $829.0 million, below its optimal balance of $1.0 billion, as AMD continues to lose money in its Computing and Graphics segment," Danely stated.

The company has guided to cash decline of $129 million, quarter-on-quarter, to $700 million, in 3Q15.

The CY2015 revenue and EPS estimates have been lowered from $3.93 billion and ($0.53) to $3.92 billion and ($0.57), respectively, to reflect a decline in revenue and margins.

Latest Ratings for AMD

DateFirmActionFromTo
Oct 2019MaintainsEqual-Weight
Aug 2019Initiates Coverage OnNeutral
Aug 2019Initiates Coverage OnHold

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

Posted-In: Christopher Danely CitiAnalyst Color Price Target Analyst Ratings

 

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