AMD, Business, Companies, VR World

Analysts lower expectations for AMD, disclose overly payment for ATI

AMD will held its quarterly results conference call today at 5PM EST (17:00 EST, 23:00 CET), and unlike conference call for the past quarter, this one will be a hard one.
We’ll list some tidbits from report made by Patrick Wang of Wedbush Morgan Securities. For starters, Wedbush Morgan estimates that AMD will report Q4 revenues of US$ 1.2B, which is 25% down on QoQ basis (excluding the infamous sale of Fab30 equipment to Russians in Q3 results),  resulting in a loss of $0.54 per share.


Due to AMD’s shaky position in commercial/enterprise segment, AMD suffered more greatly than Intel did, given the fact that AMD gets 70% of its revenues from consumer segment. As ATI (AMD GPG) gained ground and put pressure on Nvidia, it suffered the blow in the results, but still – don’t expect great results in GPU segment.

When it comes to looking into the crystal ball, Wedbush Morgan is keeping its price target down to $2.00 in the next 12 months (current share price: $2.25). This pessimism is a consequence of almost 10 consecutive quarterly losses and if we want to be honest, AMD didn’t exactly executed well as a company. Some parts did brilliantly, but some parts didn’t do well.

Fab spinoff or MAD AMD is now awaiting Feb10 shareholder vote, and we will probably see the birth of new company at CeBIT 2009.

Given the echo of current economic situation, Wedbush estimates that AMD’s revenue for Q1’09 will be 10-20% lower than current quarter, somewhere in $1.0B range, with further losses. The firm expects that gross margins will “remain under pressure in pricing, mix and minimal 45nm”.

While reading the report, it was interesting to read that AMD has to take additional goodwill impairment charge of $0.62B, bringing the total write-off to 3.2 billion USD. Given the fact that AMD paid 5.4 billion for ATI Technologies, it is more than obvious that CEO at the time, Hector Ruiz did a gross mistake when he overpaid more than three billion for the company. We cannot go into the gory details, but I personally wonder why shareholders didn’t sue AMD leadership when they had the chance… now all is said and done, and there is nothing else but to leave Dirk and his team to fix the company that Hector broke. Sadly, that is too late for many good men that left the company while Hector was in charge.

AMD did introduce temporary pay cuts, reduced its workforce by additional 1100 employees (not 900), probably targeting to once more employ around 15,000 – down from 17,000 at its peak. According to AMD’s Corporate Information, the company currently employs 16,500 people around the globe.