For Immediate Release
Chicago, IL - January 26, 2012 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
Advanced Micro Devices
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Here are highlights from Wednesday's Analyst
Earnings Preview: Celgene
) is set to unveil its fourth quarter and full year 2011 results on
January 26, 2012 before the start of trading. The Zacks Consensus
Estimate for the fourth quarter is 95 cents (year-over-year
increase of 53.2%) on revenues of $1,289 million (year-over-year
increase of 20.9%).
For 2011, the Zacks Consensus Estimate is $3.33 (year-over-year
increase of 38.2%) on revenues of $4,827 million (year-over-year
increase of 33.3%).
Third Quarter Recap
Celgene's third quarter 2011 earnings (excluding special items
but including stock-based compensation expense) of 90 cents per
share beat the Zacks Consensus Estimate by 4 cents and the year-ago
earnings by 25 cents. Higher revenues boosted earnings in the
Total revenues climbed 37% to $1.25 billion in the third quarter
of 2011. Revenues were boosted by the impressive performance of
Celgene's cancer products Revlimid and Vidaza.
Celgene has surpassed earnings estimates in two of the last four
quarters. The company recorded a maximum positive surprise of
12.79% in the third quarter of 2011. On average, the earnings
surprise was 2.09%.
We have an Outperform recommendation on Celgene. We believe that
Celgene, driven by its impressive oncology portfolio, expansion
efforts, strong balance sheet and robust pipeline, will outperform
the broader market in the coming quarters.
Our optimism is justified by the Zacks #2 Rank (Buy rating)
carried by the stock in the short run.
Few Bright Spots in AMD's Q4
Advanced Micro Devices
) reported fourth quarter loss of 10 cents a share, widely missing
the Zacks Consensus Estimate of earnings of 16 cents. Investors
clearly expected the company to be impacted by the conditions in
the PC market, so shares lost just 2.91% in after-hours
AMD's revenues in the last quarter came in at $1.69 billion,
flat sequentially and up 2.5% from the year-ago quarter. HDD
) threw the PC market put of gear and prevented the company from
meeting its guidance of a 3% sequential increase (at the
Revenues also missed consensus expectations of $1.72 billion by
1.7%. AMD clearly benefited from strength in its new products
Brazos, Bulldozer and Llano. However, the company appears to have
fared worse than
), which reported last week.
Revenue by Segment
Computing Solutions was 77% of AMD's sales in the last quarter,
up 1.8% sequentially and 7.4% from the year-ago quarter. Similar to
the September quarter, segment was performance was helped by an
increase in processors and chipsets for servers, as well as
increased shipments of the Llano APU. AMD obviously lost ground in
traditional computing systems, which may not be such a big concern,
given the current trends.
AMD's graphics business generated the remaining 23% of its
sales, down 5.2% sequentially and 9.9% from a year ago. Despite the
seasonal increase in revenue from game consoles, AMD was impacted
by the decline in mobile GPU chipsets. Overall volumes declined,
with a slight positive impact from mix.
AMD reported a pro forma gross margin of 45.7%, up 98 basis
points (bps) from the previous quarter and 65 bps from the year-ago
quarter. The gross margin benefited from higher ASPs, as AMD saw
positive mix in both segments. While the Globalfoundries issue
continues, AMD stated that it was in the process of working out a
Operating expenses of $601 million increased by around 1.5%
sequentially although they were flat with last year. The operating
margin expanded 153 bps sequentially and 162 bps year over year to
10.2%. While all expenses declined as a percentage of sales from
both the previous and year-ago quarters, cost of sales declined the
Both the segments-Computing Solutions and Graphics-did well.
Computing Solutions generated an operating margin of 12.6%, up 102
bps sequentially and 514 bps year over year. Graphics generated an
operating margin of 7.1%, which although up 409 bps sequentially
was down 897 bps from a year ago. Mix and pricing were positives
for both segments.
On a pro forma basis, AMD generated a net loss of $72 million,
or a -4.3% net margin, compared to a profit of $95 million, or 5.6%
in the previous quarter and $105 million, or 6.4% in the prior-year
Including restructuring and intangibles amortization charges,
the fully diluted GAAP net loss was $177 million, or 24 cents per
share compared to income of $87 million, or 12 cents a share in the
previous quarter and a income of $375 million, or 49 cents a share
in the year-ago quarter.
AMD has done a really good job reshaping the balance sheet.
Despite the slight decline in cash flow in the last quarter, the
company continued its opportunistic repurchases of debt. As a
result, the long term debt dropped to $1.53 billion in the last
quarter from 1.57 billion at the end of the September quarter.
The net debt at quarter-end was $251 million, compared to $253
million at the end of the September quarter and $403 million at the
end of the December 2010 quarter. AMD ended with a debt to total
capitalization ratio of 56.7%. The cash and short term investments
balance at quarter-end was $1.8 billion, down 42 million during the
Working capital metrics remained strong in the last quarter,
with inventories dropping 11.9% sequentially to $476 million and
inventory turns increasing from 6.9X to 7.7X. Days sales
outstanding (DSOs) increased from 49 to 50.
During the quarter, AMD generated $187 million of cash from
operations, spending $87 million on capex and $51 million on
repayments of debt and capital lease obligations. Management
expects debt repayments to continue.
AMD guided to first quarter sequential revenue decrease of 8%
(+/- 3%), below street expectations of around $1.6 billion. The
gross margin is expected to be around 45% and operating expenses
around $590 million.
AMD started off the year reasonably well, if not in flamboyant
style. We believe there are several things that should interest
investors at this point. The first of these is execution.
We feel really good about a company that has been consistently
delivering on its promises over the past few quarters, whether with
respect to building its product portfolio, or with respect to
cleaning up its balance sheet. The separation of Globalfoundries
freed AMD from manufacturing pressures, enabling it to focus on
However, while AMD's products are being launched on schedule and
it does look as if it will take some share from Intel, we need to
bear in mind that Intel also has some new products lined up, which
along with its growing capacity and lead at 22nm, should keep it
ahead of AMD.
Cost efficiencies can only do so much; real expansion of margins
is dependent on superior technology. AMD is on the right track and
its new products are already helping. But there seems to still be a
ways to go.
Given the continued weakness in near-term results related to
issues in the PC market, we remain cautious about investment in the
shares. AMD shares therefore carry a Zacks Rank of #4, implying a
Sell recommendation in the short term (1-3 months). We are Neutral
on a long-term (3-6 month) basis.
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