Advanced Micro Devices (AMD) Information Technology - Semiconductors | Reports April 21, After Market Closes

Key Takeaways

• The Estimize consensus is calling for EPS of -$0.13 on revenue expectations of $821.48 million, right in line on the bottom and $3.5 million higher on top.
• AMD has been on the wrong side of the semiconductor industry which has struggled from waning demand for PC’s, a strong U.S. dollar and weakness in China.
• AMD’s core business as a CPU and GPU provider continues to be second fiddle to industry leaders Intel and NVIDIA, respectively..

Today, Thursday, worldwide semiconductor manufacturer, Advanced Micro Devices is scheduled to report first quarter earnings, after the market closes. These past few years have been particularly tough for semiconductors as the U.S. dollar grows stronger and demand for PCs decline. The industry’s downturn has adversely impacted AMD’s earnings with recent estimates positioning the chipmaker to miss expectations for 7th quarter in the past 2 years. To top it off, revenue has been just as dismal, despite a small win in Q3 of last year. Ahead of these earnings, estimates have frantically dropped with per share estimates falling 6% and revenue down 3%. As a result, the Estimize consensus is calling for EPS of -$0.13 on revenue expectations of $821.48 million, right in line on the bottom and $3.5 million higher on top. Earnings continue to decline on a year over year basis with current estimates predicting a 37% decline in earnings per share and 19% fall in revenue. Given AMD’s track record, it’s not surprising the stock frequently moves downward during earnings season. Thirty days ahead of earnings the stock, on average, declines 7%. 

AMD’s core business as a CPU and GPU provider continues to relinquish market share to industry leaders, Intel (INTC) and NVIDIA (NVDA), both expected to be winners this earnings season. Unfortunately without any new innovations and mounting debt and losses, 2016 is setting up to be another down year for the semiconductor. At the end of Q4 management guided weak sales for 2016, citing weak demand for its graphic chips found in high end PCs. Additionally, the company maintains a strong presence in China which continues to struggle with weak economic conditions. The company’s increasing debt burden hasn’t done themselves any favors either. At the end of last quarter the company’s total debt surpassed $2.25 billion on $1.43 billion of net debt. Even though most experts fully expect another loss, AMD is gaining traction in the gaming industry. Both Microsoft’s (MSFT) Xbox One and Sony’s (SNE) Playstation 4 use AMD processors with no sign of jumping ship. 

Photo Credit: - EMR -