Is Another Stock Price Plunge In The Cards For Advanced Micro Devices?

Advanced Micro Devices (AMD) will report its FQ2 ’15 results this afternoon. Advanced Micro Devices has missed both Estimize and Wall Streets consensus for the past 4 consecutive quarters as the company’s top line revenues continue to shrink.

Estimize currently has 37 estimates for Advanced Micro Devices and is currently forecasting a negative EPS figure of -$0.13 compared to Wall Street’s -$0.16 estimate. Management have previously guided the market to a revenue figure of $1.112B, however they have recently downgraded their revenue assumption and now predict an 8% fall in revenues QoQ. Both Estimize and Wall Street predict lower numbers of $1.012B and $956.97M respectively.

 

Advanced Micro Devices are currently facing a number of headwinds which are negatively affecting the company’s financial performance. Their biggest concern, similar to Micron (MU) and SanDisk (SNDK) is the deterioration in sales caused by weaker-than-expected global consumer PC demand. The weakening demand for PC’s worldwide is driving the sales of Advanced Micro Devices’ PC APU products downwards at an increasing rate. Further pain was inflicted on Advanced Micro Devices on Wednesday when Intel’s management expressed further concerns in relation to the PC market, stating they believe PC demand in 2015 will be even weaker than previously expected.  Weak demand for Advanced Micro Devices’ graphics cards, falling margins and poor market sentiment are all contributing to the share price weakness.   

One positive for Advanced Micro Devices is its exposure to console gaming. Advanced Micro Devices provides chip placements in Microsoft’s (MSFT) Xbox and Sony’s (SNE) PlayStation. This segment of the business has remained strong, however it has not been enough to compensate for the falling sales from the PC segment.  

Overall, Advanced Micro Devices are in trouble and today’s result may only escalate the problems. If they miss estimates again, the share price will act accordingly. Expect management to comment on their market share performance over the quarter, if no positive ground has been made this will be another negative facing the firm. Management are relying on increasing market share in a deteriorating PC market and to also have success with innovation with new product releases.

Advanced Micro Devices has a track record of missing estimates. Make sure you get your estimates in here and get your ranking after they report.