AMD Shares Slip in Wake of Q3 Report
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Flash memory remained profitable for AMD, but declined sharply from the previous quarter due to inventory adjustments at cell phone manufacturers.
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(InfoWorld) - Advanced Micro Devices' move to cut overhead costs by outsourcing its chip manufacturing business may backfire in the long run, according to several analysts who have downgraded the company's stock. AMD is struggling it keep its head above water after posting losses of $611 million and $574 million for its past two quarters. The company has also drawn criticism for its manufacturing, with recent reports that it will delay the full-volume launch of the "Barcelona" quad-core Opteron server chip from July to October. That would hobble AMD in its effort to compete with surging rival Intel. Although AMD's Opteron has won over many users of Intel's Xeon server chips since its launch in 2003, that trend is now in a sharp reversal, according to a June 13 report from Jon Peddie Research. In the market for workstation processors, AMD had pushed Intel's share down to 87.6 percent in the first quarter of 2006, but Intel has rebounded since then, reaching 92 percent share in the first quarter of 2007. The building pressure recently prompted some analysts to predict that AMD might stop manufacturing any chips at all and convert to a fully outsourced business model as soon as 2008. AMD said that rumor had come from a "speculative" Goldman Sachs report, but confirmed that the company is trying to focus its efforts on developing chips instead of manufacturing them, according to AMD spokesman Drew Prarie. AMD currently has a deal giving it access to IBM's chip fabrication plant in East Fishkill, New York. Under that arrangement, AMD can perform much of its research and development without having to incur the cost of owning its own manufacturing plant, he said. "We're looking to find ways to extend that model beyond research and development to the full range of the manufacturing supply chain," Prarie said Monday. "That could run the range from increasing the amount of processors we send out for chartered manufacturing, and could also include things like establishing partnerships on the manufacturing side." AMD has already taken some steps in this direction. In 2006, AMD announced a plan to give Chartered Semiconductor Manufacturing a heavier load, asking the firm to begin making the new 65-nanometer scale Athlon chips and other processors. And in May, AMD announced that it hadÂ awarded the job of manufacturing its newest graphics chips to Taiwan Semiconductor Manufacturing Company (TSMC). Now the company may be preparing to expand that model, according to a June 17 report from Citigroup analyst Glen Yeung. AMD is on the verge of making a "transformational move" such as outsourcing a larger share of low-end processors to TSMC, selling a share of the manufacturing capacity in its Fab 30 chip-making plant in Dresden, Germany, or even selling a share in its planned $3.2 billion chip plant in Saratoga County, New York, Yeung wrote. Despite AMD's insistence that such an arrangement would simply allow it to stay in the chip business while cutting costs, the uncertainty makes Wall Street analysts nervous. The Citigroup report lowered its estimate of AMD's future revenue from $1.3 billion to $1.1 billion for the second quarter, and from $5.8 billion to $5.6 billion for the full year of 2007. Those figures would represent a flat performance compared to AMD's performance last year, with $1.22 billion of revenue in the second quarter of 2006 and $5.6 billion for the full year. "We are again lowering AMD estimates, this time for 2Q07 (we had previously lowered 2H07), reflecting our field checks suggesting current conditions are weak," Yeung wrote. While Citigroup recognizes that AMD could be moving away from its own manufacturing and that could help the company cut costs, "we remain on hold for the shares given near-term weakness," he wrote. In contrast, Yeung said Intel would continue to enjoy a competitive advantage thanks to theÂ potential delay of AMD's Barcelona chips, the rising popularity of Intel's new Santa Rosa notebook platform, and the continued sales of Core-family chips for desktop PCs.
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Chip maker Advanced Micro Devices  Inc. AMD.N on Tuesday reported a quarterly loss from a  year-earlier profit following a reduced forecast it gave last  week.
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Advanced Micro Devices Inc. warned Monday that it was unlikely to meet its first-quarter revenue guidance of $1.6 billion to $1.7 billion, the latest in a series of disappointments for investors in the struggling chip-maker. The company's stock fell to a new 52-week low on the news.
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Despite a strong third-quarter performance from Applied Materials (Nasdaq: AMAT), a weaker fourth-quarter outlook has the chip equipment maker&#39;s shares treading water today.
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It was a quarter where AMD shipped more product than ever in its history, with 68% more mobile processors headed for trucking than at this time last year, and graphics processors adding substantially to that mix. It regained a full eight points of gross margin over the prior quarter, and reaped 22.9% greater revenue over the third quarter of 2006. And yet it still posted a loss. What's going on?
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SHARES are set for a bumpy ride after Wall Street lost ground on the weekend, derailed by weak US jobs data and a poor prognosis from Intel which sparked worries for the health of the tech sector.
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U.S. stocks slid on Thursday after a   report said factory activity contracted in the U.S.   Mid-Atlantic region in September for the first time in over   three years, prompting worries about a slowdown in the U.S.   economy and corporate profits.
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Shares fall as company warns on global economy, 4Q forecast misses analysts&#39; estimates by 2 cents. CHICAGO  - Diversified manufacturer 3M Co.
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Advanced Micro Devices (NYSE: AMD) continues to plug away at microprocessor rival Intel&#39;s (Nasdaq: INTC) lead, which once seemed insurmountable.
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U.S. stocks slipped on Tuesday on a sell-off in the semiconductor sector after microchip maker National Semiconductor Corp.  cut its quarterly revenue forecast, while Dow component Hewlett-Packard Co.  declined on news about a competitor's product launch.
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Tech stocks were mixed for the holiday week, with analyst revisions moving key sector players. Intel (nasdaq: INTC - news - people ) shares fell tumbled Tuesday after Credit Suisse First Boston lowered the
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(InfoWorld) - Dell Inc. Tuesday pointed to its adoption of processors from Advanced Micro Devices Inc. (AMD) for pushing it to US$677 million in profit for the third quarter, though the company has delayed reporting final numbers due to an accounting investigation by the U.S. Securities and Exchange Commission (SEC). Dell's preliminary results mark anÂ improvement over the third quarter last year, when it reported $13.91 billion in revenue and a profit of $606 million. Dell reported revenue of $14.38 billion for the quarter, which ended Nov. 3, 2006. Dell did not offer an official comparison to the year-earlier figures, however. Dell reported earnings of $0.30 per share for the third quarter in 2006, beating the estimates of analysts who had expected Dell to earn $0.24 per share on revenue of $14.44 billion, according to a survey by Thomson Financial. The company was scheduled to report its earnings last Thursday, but delayed the move because it was trying to cooperate with investigations by the SEC and the U.S. Attorney for the Southern District of New York. Company leaders had cited the same reason after they missed a deadline for notifying the SEC of their second quarter earnings. They have still not filed that report, called a Form 10-Q. Company executives were not available to comment on the results. The company filed the numbers in a press release only, skipping the traditional conference call with reporters and analysts. Dell pointed to its success in selling computers powered by AMD processors for its impressive numbers. After missing its earnings target for the first quarter, Dell said in May it would finally diversify from selling computers with chips from Intel Corp. Still, Dell is having a rocky year. In June, Chief Executive Kevin Rollins promised to rebound from weak earnings by investing $100 million in customer service and by using fewer rebates in setting PC prices. But in August, Dell was forced to recall 4.1 million defective laptop batteries. Next, Dell acknowledged it was under investigation by the SEC, and, last week, lost its status as world's largest PC vendor to rival Hewlett-Packard Co.(HP). HP turned up the pressure last week when it reported net income of $1.7 billion for the fourth quarter, more than four times its mark for that period last year. Â
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U.S. stocks slipped on Wednesday as a report that suggested stronger-than-expected November job growth reduced the chances of an interest-rate cut and on concerns about the outlook for software companies after a negative report on Oracle Corp..
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Considering the devastating two years Advanced Micro Devices Inc. has endured, investors braced themselves for more bad news in the fourth quarter after rival Intel Corp. disappointed Wall Street with lackluster results.
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Technology stocks led Asian shares  lower on Tuesday as investors reacted to evidence that Japan's  recovery was slowing and analysts cited risks in the outlook  for tech bellwether Intel Corp.
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InfoWorld - Amid further delays of AMD's quad-core server chip and plans to write off goodwill from the acquisition of ATI, AMD executives are going to face tough questions when they meet financial analysts in New York Thursday.