Advanced Micro Devices, Inc.
) is scheduled to announce its first-quarter 2012 results on April
19, 2012. We witness only 1 upward movement in the analysts'
estimates in the build-up to the release.
AMD's fourth-quarter non-GAAP earnings were 19 cents a share,
ahead of the Zacks Consensus Estimate of 16 cents due to better
gross margins and lower-than-expected expenses.
Revenue came in at $1.69 billion, flat sequentially and up 2.5%
from the year-ago quarter. In the last quarter, the company
benefited from strength in its new products viz, Brazos, Bulldozer
and Llano but could not meet its guidance of a 3% sequential
increase due toHDDshortages which hit the PC market.
Gross margin was up 98 basis points (bps) sequentially and 65
bps year over year to 45.7%, driven by higher ASPs and a favorable
mix. Operating margins also expanded in the quarter on lower
operating expenses and solid cost management.
First Quarter Guidance
AMDguided to first quarter sequential revenue decrease of 8%
(+/- 3%), below the Street expectations of around $1.6 billion. The
gross margin is expected to be around 45% and operating expenses
around $590 million.
(Detailed earnings results can be viewed in the blog titled:
Few Bright Spots in AMD's Q4
Agreement of Analysts
Out of the 24 analysts providing estimates for the first
quarter, none revised the estimates in the last 30 days. Over the
same period, only 1 analyst made an upward revision for fiscal
With the Gartner report indicating an improving PC environment
and hard drive shortages recovering a bit faster than anticipated
by many, the majority of analysts believe thatAMDwill come out with
in-line March quarter results. They believe that AMD continues to
improve 32nm yields at GlobalFoundries, and this improving yield
should lead to expansion inAMD's gross margins.
On the other hand, a handful of analysts expect first quarter
revenue to be above the Street consensus estimate of $1.56 billion.
They expect the upside to come from further share gains in
entry-level notebooks (Brazos) and continued growth in servers. The
analysts believe that once the macro environment improves,AMD will
likely benefit from share gains in servers and cloud computing, and
increasing content in notebooks and desktops. The analysts also
expect value-priced Trinity based ultrathins to be a solid driver
in the second half of 2012.
However, the majority of analysts believe that the company will
be limited by stiff competition from
). They remain concerned about share losses to Intel, as Intel
rolls out a number of new products including 22nm IvyBridgefor PC
clients and Romley for servers.
Magnitude of Estimate Revisions
In the past 30 days, there was no change in the Zacks Consensus
Estimate for the first quarter, although the estimate for fiscal
2012 increased a penny to 66 cents.
Over the 90-day period, the Zacks Consensus Estimate fell by a
penny to 9 cents for the first quarter but increased 7 cents to 66
cents for fiscal 2012.
AMD is the second largest producer of microprocessors, GPUs and
chipsets in the world. The company's new products, strength in
graphics, and advancements in 32nm manufacturing are quite
encouraging. An improvingHDD supply chain, its strong product
portfolio and cost management should positionAMD for an in-line
WhileAMD suffered from GlobalFoundry 32nm yield issues last
year, the company's recent adoption of a new wafer pricing
agreement indicates that these issues could be behind it.
Additionally,AMD's promise to deliver competitive products with
Llano and Bulldozer should also increase its market share.
However, Intel also has some new products lined up, which along
with its growing capacity and lead at 22nm, should keep it ahead
ofAMD. Hence,AMDshares carry a Zacks Rank of #3, implying a Hold
recommendation in the short term (1-3 months).
ADV MICRO DEV (
): Free Stock Analysis Report
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