News AMD hits its targets thanks to console APU deals

Well it's a bit more cheerful than some of their press lately

Good on em.

 

"the company's shares dropped a massive 11.51 per cent to $3.69." - Ouch! especially if you have held them since 2000

 

I'd say a good time to buy AMD shares. That is a massive turnaround financially and only really comes from the early uptake of consoles. This should be a good sign that the next two years will be good when the majority of people upgrade their consoles. The share price drop is obviously people who were expecting a bigger jump and quick price bump.

 

I'm not so sure about that. The main reason for the renewed downturn in share price was the downcast of Q1 results as the peek last quarter was pre holiday/Christmas sales.

 

Maybe I am mistaken but didn't they agree to sell and lease back substantial real estate assets in Texas back in March for over $150m cash? If so, aren't those extra funds helping to gloss over their issues? Especially as they still made yet another annual loss, a loss of over $87m. Maybe that also accounts for the ever decreasing share prices, I mean, how much more do they have to sell?

 

I'm not a console user but from what I've seen most people are sticking to 360/ps3 with the intention of upgrading over the next year or two. irl I know of only three people that have taken the plunge yet. The high price of the consoles in the current economic climate mean people will be upgrading later if/when they can afford it as opposed to splashing out at christmas like previously was the case. Also the lack of PS4's in the shops has stopped a lot of people getting that particular console. I've seen plenty of XBones though.

 

SexyHyde - the numbers don't support your observations. Stock of both the X1 and PS4 has been plentiful compared to previous console launches, the consoles have launched at a lower price than the last generation and the sales of the consoles within their launch window prove that there is a massive interest and uptake. We're talking around 7.5 million consoles sold since their launch, figures that took the 360 and PS3 much longer to achieve due to higher price and low stock availability. You "knowing in real life" just a few people who have a new console does not bear any significance in relation to how many have been sold. It could just mean all your friends are broke.

 

Stock of PS4 in my area has been snapped up straight away. I have not seen any units available for sale. A lot of the people I know irl are waiting to see what everyone else is buying. Of the three people I know that have upgraded, two have switched from 360s to PS4 this is more of an issue now online is a big feature and wasn't relevant with previous console releases. People are holding off so they can play with their friends. Also as you can get COD on the 360/PS3 the majority of people can stick with their old console. So you have to take the differing market conditions into account. Also console use is more mainstream now, with more casual gamers. So a growth would be expected, there is more people in the pool now.

 

Or, you know, just plain uninterested.

I'm really not seeing massive excitement over the latest generation of consoles. Also, it seems most games are still made for PS3/XBOX360 too, so there's precious little incentive to get a new one.

 

Hopefully AMD turns to a healthy profitability, or else we are doomed.
Intel & Nvidia going to charge the Moon if AMD goes down.

As for PS4 stocks. In Denmark, whole country, there were only allocated 2,000 PS4 for December. So quite a few colleagues from there, popped over to UK by ship, filled their cars and went back home. All the units were for friends, families and Christmas presents. While in UK they were 30% cheaper.

 

Your correct in essence about the asset stripping that they have done this passed year to keep those numbers within reason. That + Q1 been poor estimates is the reason for the drop in share price. Shares have rarely been above $4 though so 11% may sound like alot but its about 40 cent that its dropped.

There net loss without those asset stripping would of been alot higher around the $300 million mark.

Also the fact that Jan - March is always a poor time for tech companies no matter who you are. Sales are always poor after christmas period.

AMD in profit is a good thing though if it lasts.

In the UK at least Ps4 is basically sold out, Certain shops do have stock in but they go fast. Xbox one is more available. Both are not sold just as consoles though, Both getting sold in bundles with games and stuff. Ps4 price is like £540 for the cheapest package ive seen one for sale in, Xbox one is closer to £600 mark.

Niether is at the stage where you can walk into game and come back out with just the console.

Marketing conditions? Ps4 is the fastest selling console of all time, If it continues at its current rate it could even beat the Ps2s records from years back. Playing with friends online is an issue for the younger consumer I guess, But the older consumer is unlikely delaying there purchase so they can play fifa14 with a work colleague.

Lack of game selection on both is the only reason ive not brought one yet.

 

I like to think that I am partly resposible for this, considering I recently bought a ps4 and a kavery cpu! You're welcome AMD!

 

I can't speak for retailers as I haven't been in one in ages but Amazon has PS4's for sale and in stock with Killzone - SF or Knack bundles from them direct for £385 and stand alone consoles are available to order now for a Jan 30th send out for £349. Sure some of the other bundles are sold out but if you really want one they are there now.
They also have XBox One's stand alone consoles available for £429 or with FIFA 14 for £449.

 

Advanced Micro Devices Inc shares fell 11 percent in early trading after the chipmaker forecast a steeper-than-expected fall in quarterly revenue, prompting at least two brokerages to cut their price targets on its stock.

Weak PC sales, tough competition from Intel Corp and a drop in revenue from gaming consoles after a strong holiday season were responsible for the weak forecast, analysts said.

Canaccord Genuity cut its price target to $5 from $6, while FBR Capital Markets lowered its by 50 cents to $5.50.

Shares of AMD, whose processors are used in Microsoft Corp's and Sony Corp's latest game consoles, were trading at $3.74 on the New York Stock Exchange.

"Once again AMD has dashed the hopes of the believers," Bernstein Research analyst Stacy Rasgon wrote in a report.

"The quarter's results again reiterated serious concerns over the health of AMD's core PC business, which appears to be collapsing."

This is not a bad quarter from a numbers perspective but as an investor, one has to wonder what's next. If the company can only generate $0.06 of earnings in a quarter when both Microsoft and Sony launched next generation platforms, what levers can the management pull when favorable market winds are no longer behind the company? Unless something drastic changes, this may be as good as it gets.

Two key issues arose in the question and answer session on the earnings call: 1) management guiding cash balances lower and 2) the CEO running away from a question about an additional leg down for the gross margins. The first issue is bad. A lower cash balance is never a good thing, especially in a capital intensive industry. Suggesting that it would be lower in the first quarter would not have been good but stating that it is in the company's best interest to "target cash levels in the $1 billion range" which implies $200 million down from current levels is downright bad. Sadly, the second issue is even worse. By leaving the door open to more margin erosion, professional investors will take a wait and see attitude.

Despite printing decent quarterly results, a look behind the numbers makes AMD a wait and see company. Until there are indications that revenue can grow after the console cycle and margins will stabilize, its likely that this stock will remain in the penalty box.

 

my it teacher told me he bought in a little over 10 years ago..... i believe i could see behind his eyes the seething anger of a man willing to murder ceos in cold blood xD

 

Stock will become available again at the end of January in numbers. This is not the sort of shortage we saw with the previous gen consoles, Sony and MS are manufacturing 1+ Million consoles a month each, a number that is unprecedented for both of them. The fact that you still can't get them in the stores is evidence that there are consumers who aren't on the fence about buying them, who aren't taking a wait an see approach.

There is a general sense of apathy, I for one have a PS4 from UK launch but haven't played anything beside Killzone on it, and that's very pretty but it's generic. I doubt though that the price is going to get slashed when they're still selling out and I've only to wait until March until we start seeing interesting stuff.

I just generally don't agree with your sentiment that people are being more cautious about buying because of the economic climate or the importance of online. The things are selling in record numbers, and their release marks the end of one of the longest hardware cycles ever; people are ready to buy a new console and that is quite simply what is been borne out by the sales figures.

 

I've seen XBones in loads of stores available to buy any way you please. PS4 is just unavailable in stores it goes out as soon as it comes in. This is evidenced with the latest sales figures of PS4 @ 4.2m and XBone @ 3m.

My evidence of people sitting on the fence is talking to people that have expressly told me they are waiting, either to see what their friends get or just waiting for a larger portfolio of games. I've noticed a large portion of 360 users interested in switching to a PS4, this has the issue of leaving friends you game with behind if they too don't cross platform. I had this conversation with the two people that swapped platforms and a handful that are sticking with the 360 for a few months at least. Oh the fact that the PS4 hasn't released with all features (which will be available later in updates - possibly) is another reason I've heard for people sitting on the fence. Mandatory Kinect with XBone and the snoopy camera and always on mic - i've heard that too. The fact that the XBone isn't 1080p i've heard that mentioned. I'm a sociable guy all of this I heard irl from a varied bunch of folks, not on the web in any geek centric site.

I'll agree it is a massive hardware cycle. I'll agree people want a new console. BUT, I'll point to the fact that the economic climate we are in means more people have less disposable income than before and where in the past may have just got it on impulse will wait until they DEFINITELY want it. I can't remember people talking about similar issues I mentioned above with previous consoles. The only thing I can remember people using as a hold off excuse before was waiting for a game release.

 

For investors wondering: AMD stated its future in the earnings call. Within the next two years it expects 50% of its income will be dedicated to custom semi-con. Other focus areas will be 64-bit ARM server chips.

So, assuming the company doesn't go on a hiring splurge, that's less time and energy into PC derivatives.

 

The problem is that AMD without consoles shrunk quite a bit last year. CPU sales were 25% down, this was hidden by all those console sales so AMD came out about even. Now console sales are going to remain steady, but they are not a way of growing the company. Investors aren't sure how they are going to do it. They say 50% of income from "custom semi-con" but since the consoles what "custom semi-con" deals have AMD announced that are going to provide all this income?