October 21, 2015
By Jeffrey Hagenmeier
Advanced Micro Devices. Inc. (AMD) operates as a global semiconductor company. AMD is the second largest worldwide supplier of microprocessors, based on the x86 architecture and also one of the biggest providers of graphic processing units. Based in Sunnyvale, California AMD develops computer processors and related technologies, for both business and consumer markets.
The main products of the company include embedded processors, graphic processors for servers, microprocessors,motherboard chipsets, personal computers, embedded system applications and workstations. Originally AMD manufactured its own processors, but became fabless after the 2009 spinoff of Global Foundries.
Advanced Micro Devices is in competition with rival Intel for the CPU (central processor) market, which is based on the x86 based personal computers. In the discrete graphics processor units (GPU) market AMD and competitor Nvidia, dominate the sector. This has been the case since AMD acquired ATI in 2006.
AMD sells its products through a direct sales force, independent distributors, and seals representatives. The company mostly serves original equipment manufacturers, original design manufacturers, system builders, and independent distributors.
The company was founded in 1969, but became listed on the New York Stock Exchange in 1979, after total sales topped $100 million USD (United States Dollar) the previous year. As of July 1, 2014 AMD was reorganized into two business groups. Computing and Graphics is one group and the other is Enterprise, Embedded and Semi-Custom. Part of the plan called for a 7% global downsizing of personnel, by the end of 2014.
The company presently employs a staff of 9,475 individuals, with average revenue of $440,412 per worker.
The semiconductor business has been undergoing a process of consolidation and retrenchment for the past few years. The Personal Computer market has been shrinking for some time and the top companies are attempting to grab more market share, as a result. Intel and Nvidia have been somewhat successful in this effort, mostly at the expense of AMD.
Keeping this in mind, it partly explains the 3rd quarter report. Corporate revenue is down 26% from a year ago. It has dipped to $1.06 Billion USD. Last year at this time, AMD was able to post a small profit of $17 million. The 3rd quarter this year, saw a net loss of $197 million USD.
At this point AMD is losing money at an alarming rate. The 3rd quarter, saw the cash total drop an additional $74 million. At that rate of burn, the $755 million USD on hand will be gone in 30 months.
Predictably, the company has been increasing cost cutting measures. However waste and efficiency have mostly been drained out already. Further reductions at this juncture, come at a cost in operational resourcefulness. A perfect example of this is a delay in releasing a new product known as the Zen processor family. Instead of the expected production coming in 2016 as was promised, it will be widely available only in 2017. In the world of technology, this is troubling situation. It will result in AMD falling behind in technical prowess with competitors.
Recent efforts at selling off pieces of their business and patents in order to raise capital, only accentuates the overall decline of the company.
The exodus of leading individuals including top management, is another sign that the company is undergoing severe challenges, which are getting harder to overcome. Reorganizations and restructuring are becoming increasingly meaningless, in an environment of shrinking revenue and rising losses.
Advanced Micro Devices (NASDAQ: AMD) ended the trading day 10/20/15 at $2.02 USD. The opening share price was $2.00, with a high of $2.03 and a low of $1.97. The previous day closing was $2.01. In after hours trading, the stock price declined to $2.00 USD.
In the last 5 days, the share price has gone from a high of $2.06 on 10/15/15, to a low of $1.89 on 10/16/15. This was a decline of 8.99%.
In the last month, the stock has gone from a high of $2.06 on 10/15/15, to the low of $1.65 on 09/29/15. This was an increase of 24.85%.
In the last 3 months, the share price has gone from a high of $2.21 on 08/05/15, to a low of $1.61 on 07/27/15. This was an increase of 37.27%.
The 52 week high for AMD is $3.37 USD and the 52 week low is $1.61 USD.
As recently as March of 2012, the share price was in excess of $8.00 USD. In May of 2000, the price of the stock was in excess of $92.00. The original price of the stock was $3.00 USD, back in January of 1978.
The volume of shares traded yesterday was 5,584,188. The 3 month average is 11,077,600.
Market capitalization is now at $1.57 Billion USD.
The P/E (price earnings ratio) is not applicable, because the company is losing money.
The EPS (earnings per share) is -$1.19.
The Dividend and Yield are both not applicable, since the company posted a loss for the 3rd quarter.
If one sets the short at $2.01 USD, one can set a short term target at $1.82. The $0.19 decline in the share price, will provide investors a return of 10.44%.
A medium term target may be placed at $1.67 USD. This $0.34 decline in the share price, will permit a 20.36% return for investors.
A long term target may be put in at $1.54 USD. This $0.47 diminution in the price of the stock, will provide a return of 30.52% for investors.
Cautious investors, may wish to place a stop target at $2.62. This would indicate a 30.35% increase in the price of the stock.
@ 2014 The Day Trading Academy. All rights reserved. This work is based on SEC filings, interviews, corporate press releases, and extensive research done across investment articles, current events, and investment expertise. It may contain errors, and you shouldn’t make any financial decision based solely on what you read here. It’s your money and your responsibility. As with any investment, there is no guarantee against potential loss. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. This publication’s sole intended purpose is to provide investment-related information as well as education and opinions to subscribers and the recommendations and analysis presented to members is for the exclusive use of members.