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Oppenheimer On AMD Following Earnings: PC's 'Turning The Corner, But Challenges Remain'

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  • The share price of Advanced Micro Devices, Inc. (NASDAQ: AMD) have declined 27.04 percent in the last six months, from a high of $2.87 on April 16.
  • Oppenheimer’s Rick Schafer has maintained an Underperform rating on the company.
  • The company reported its Q3 sales modestly above the consensus expectations, although the loss per share was worse than expected.

Analyst Rick Schafer also mentioned that the management guidance to a decline in the Q4 sales by 10 percent quarter-on-quarter to $90 million, below the consensus forecast of $1 billion, “as seasonal declines in semi-custom are partially offset by modest growth in Computing/Graphics.”

On a positive note, the company has entered into a joint venture with Nantong Fujitsu Microelectronics, “which, upon close, provides AMD with a much needed $320M cash infusion, helping offset the ~$260M cash burn we forecast through CY16,” Schafer stated.

With regard to the Q3 results, the Computing/Graphics business generated a 12 percent quarter-on-quarter increase in revenue, driven by sequential growth in the channel, which helped mitigate the ongoing softness in consumer PCs. The Enterprise, Semi-Custom and Embedded segments also reported a 13 percent quarter-on-quarter increase in revenues, “as AMD's semi-custom design wins began to ramp in support of holiday console sales.”

According to the Oppenheimer report, “Management believes PC has turned the corner after a multi-quarter channel inventory re-balancing effort and expects Computing/Graphics up again Q/Q in 4Q.”

However, Schafer believes that the company’s outlook could prove optimistic, given the uncertainty regarding Win10 being able to drive sustainable PC growth.

“While AMD's updated product road-map could help re-accelerate non-PC growth, and new semi-custom design wins are encouraging, time-to-revenue and structural PC challenges likely remain an overhang for the foreseeable,” the report added.

Latest Ratings for AMD

DateFirmActionFromTo
Aug 2019Initiates Coverage OnNeutral
Aug 2019Initiates Coverage OnHold
Aug 2019Initiates Coverage OnHold

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

Posted-In: Oppenheimer Rick SchaferAnalyst Color Reiteration Analyst Ratings

 

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