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AMD Misses Again
Fabless chipmaker AMD has come up with a mixed set of results for the second quarter. The company managed to make as much cash as the cocaine nose jobs of Wall Street expected, but missed revenue expectations.
In fact its revenues were below the psychologically important billion figure at $942 million.
We knew it was going to be bad. Last week we were warned that the results would be flat. The actual figure was $942m, an 8.5 per cent sequential decline and a 34.6 per cent drop from the same period a year ago.
As you might expect, there are some measures of this not being AMD’s fault. The company is almost entirely dependent on PC sales. Not only have these fallen but don’t look like they are going to pick up for a while.
AMD’s Computing and Graphics division reported revenue of $379m, which was down 54.2 per cent, year-on-year. Its operating loss was $147m, compared to a $6m operating loss for last year’s quarter.
Lisa Su, AMD president and CEO, in a statement said that strong sequential revenue growth in AMD’s enterprise, embedded, and semi-custom segment and channel business was not enough to offset near-term problems in its PC processor business. This was due to lower than expected consumer demand that impacted sales to OEMs, she said.
“We continue to execute our long-term strategy while we navigate the current market environment. Our focus is on developing leadership computing and graphics products capable of driving profitable share growth across our target markets,” she added.
In the semi-custom segment, AMD makes chips for video game consoles such as the Nintendo Wii U, Microsoft Xbox One, and Sony PlayStation 4 consoles. That segment did reasonably well, up 13 percent from the previous quarter but down 8 percent from a year ago.
But AMD’s core business of processors and graphics chips fell 29 percent from the previous quarter and 54 percent from a year ago. AMD said it had decreased sales to manufacturers of laptop computers.
Figures like this strap a large target on AMD’s back with a sign saying “take me over” but AMD is not predicting total doom yet.
For the third quarter, AMD expects revenue to increase 6 percent, plus or minus 3 percent, sequentially, which is a fairly conservative outlook given the fact that Windows 10 is expected to push a few sales its way.
AMD supplies chips to the Nintendo Wii U, Microsoft Xbox One, and Sony PlayStation 4 consoles and these seem to be going rather well.
Did AMD Commit Fraud?
AMD must face claims that it committed securities fraud by hiding problems with the bungled 2011 launch of Llano that eventually led to a $100 million write-down, a US court has decided.
According to Techeye US District Judge Yvonne Gonzales Rogers said plaintiffs had a case that AMD officials misled them by stating in the spring of 2011 and will have to face a full trial.
The lawsuit was over the Llano chip, which AMD had claimed was “the most impressive processor in history.”
AMD originally said that the product launch would happen in the fourth quarter of 2010, sales of the Llano were delayed because of problems at the company’s chip manufacturing plant.
The then Chief Financial Officer Thomas Seifert told analysts on an April 2011 conference call that problems with chip production for the Llano were in the past, and that the company would have ample product for a launch in the second quarter.
Press officers for AMD continued to insist that there were no problems with supply, concealing the fact that it was only shipping Llanos to top-tier computer manufacturers because it did not have enough chips.
By the time AMD ramped up Llano shipments in late 2011, no one wanted them any more, leading to an inventory glut.
AMD disclosed in October 2012 that it was writing down $100 million of Llano inventory as not shiftable.
Shares fell nearly 74 percent from a peak of $8.35 in March 2012 to a low of $2.18 in October 2012 when the market learned the extent of the problems with the Llano launch.
Will Sprint Acquisition Efforts Succeed
May 19, 2014 by admin
Filed under Smartphones
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Sprint Corp is meeting with banks to devise a funding plan for its bid for smaller rival T-Mobile US Inc, a source familiar with the situation said, as the mobile carrier works to ease regulatory concerns that the deal would hurt competition.
The source said that Sprint, which is owned by Japan’s SoftBank Corp, is looking to fund the bulk of T-Mobile’s estimated $50 billion price tag with corporate bonds and cover the rest with syndicated loans and convertible bonds.
Sprint is currently having discussions with at least five banks, the source told Reuters, including JP Morgan, Goldman Sachs and Deutsche Bank.
Bloomberg, which first reported that Sprint was in talks with banks on Thursday morning in Asia, said the carrier was also talking to Mizuho Financial Group Ltd and Citibank. Softbank is expected to make a formal offer in June or July, Bloomberg added.
Sprint spokeswoman Roni Singleton told Reuters the company does not comment on rumors and speculation. T-Mobile and SoftBank both declined to comment on the Bloomberg report.
Sprint is facing a battle ahead with U.S. regulators who oppose consolidation in the wireless market on the basis it would inhibit competition. The company is aware it may have to give up some of its spectrum holdings to win over critics, the source said.
Two of the most vocal opponents to the deal are Federal Communications Commission Chairman Tom Wheeler and U.S. antitrust chief William Baer, who have pointed to T-Mobile’s success since U.S. authorities rejected a 2011 merger between AT&T Inc and T-Mobile on the grounds the market needs at least four major players to be competitive.
The failure of that deal cost AT&T a $6 billion break-up fee, a penalty Sprint feels confident it can avoid, the source said, adding that it is leaning towards having Deutsche Telekom, which currently owns 67 percent of T-Mobile, retain part of that stake.
Banks Join Instant Chat
October 16, 2013 by admin
Filed under Around The Net
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Goldman Sachs Group Inc, JPMorgan Chase & Co and six other financial institutions have agreed to join a new instant messaging network from Markit and Thomson Reuters Corp to connect disparate messaging systems.
The network, called Markit Collaboration Services, launched on Monday and allows members to chat with one another regardless of the proprietary messaging technology that each firm uses.
This open platform differs Bloomberg LP’s messaging system, which is a closed network only for users of Bloomberg terminals.
Bloomberg messaging is the most popular form of chat on Wall Street, and often cited as one of the reasons banks are willing to pay around $20,000 a year for a subscription to a Bloomberg terminal.
Markit and Thomson Reuters said they hoped their open messaging network will attract banks that want to chat with their clients or other financial institutions but cannot currently do so because they are on different messaging systems.
The other banks that have joined the new network are Deutsche Bank, Bank of America Merrill Lynch, Barclays, Citigroup, Credit Suisse and Morgan Stanley, according to a statement from Markit.
The banks collectively employ more than 1 million people worldwide, though it was not immediately clear how many individuals will use the new Markit service.
David Craig, president of Thomson Reuters’ Financial & Risk division, said one of the challenges facing banks is that their messaging systems do not always talk to one another. “That creates costs and complexity,” he said.
Markit and Thomson Reuters said the messages on the new network are encrypted, and the system does not store them.
Representatives from Bank of America, Deutsche Bank, Goldman Sachs and Morgan Stanley were not immediately available to comment on the new messaging system. Representatives from Barclays, Citi, Credit Suisse and JPMorgan also declined to comment.
Should Investors Dump AMD?
If you have any old AMD shares lying around you might like to sell them as fast as you can, according to the bean counters at Goldman Sachs.
Despite the fact that the company is doing rather well, and its share price is has gone up rapidly over recent months, Goldman Sach analysts claim that the writing is on the wall for AMD. It thinks that AMD shares will be worth just $2.50 soon. The stock’s 50-day moving average is currently $2.98.
The company said that while AMD could clean up in the gaming market even if you take those figures into account the stock is trading at 22 times its 2014 CY EPS estimate. In other words the company’s core PC business is still shagged and still will generate 45 per cent of the company’s 2013 revenue.
“We therefore believe this recent move in the stock is just the latest in a long history of unsustainable rallies, and we are downgrading the stock to Sell. We believe the current multiple is unjustified for any company with such significant exposure to the secularly declining PC market,” the firm’s analyst wrote.
Analysts at Sanford C. Bernstein think that the share price will settle on $2.00 and FBR Capital Markets thinks $3.00. In other words if you want to know what is really happening at AMD you might as well ask the cat, than any Wall Street expert.
Is E-Commerce Next For Facebook?
April 13, 2012 by admin
Filed under Around The Net
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A group of e-commerce start-ups, backed by some of the tech world’s most respected financiers, are hoping that Facebook Inc will become an e-commerce powerhouse to rival Amazon.com Inc and eBay Inc.
As the world’s largest social network moves toward a $5 billion initial public offering, it will come under more pressure from Wall Street to generate new sources of profit growth and reduce its reliance on advertising, which accounted for 85 percent of its 2011 revenue.
Some entrepreneurs and investors increasingly think “f-commerce” – meaning e-commerce on Facebook – is the answer. Start-ups such as BeachMint, Yardsellr, Oodle and Fab.com are coming up with novel ways to persuade Facebook users to not just connect with friends on the social network, but to shop as well.
Backed by tens of millions of dollars from venture capital firms like Accel Partners and Andreessen Horowitz, and other big investors like Goldman Sachs, these start-ups are pushing out shopping apps, hosting online garage sales and testing out new business models on Facebook.
“E-commerce is a huge category with very strong tailwinds and it’s a natural move for Facebook,” said Sam Schwerin of Millennium Technology Value Partners, which owns Facebook shares and has a stake in BeachMint.
Amazon revolutionized online shopping by crunching lots of customer and purchase data to come up with relevant, personalized recommendations. In the same vein, Facebook’s combination of data, analytics and payment technology could fuel the next generation of e-commerce, Schwerin said.
Is Intel Facing The Heat?
Analysts at Goldman Sachs are saying that chip maker Intel may be in a pickle as microprocessor shipments slow and it faces stiff competition. That said, analysts have advised stockholders to sell Intel as they downgraded the stock.
James Covello and Simon Schafer of GS said that there will be a surplus in chips due to plant expansion. Meanwhile the rest of the gang on Wall Street is forecasting a six percent year-over-year rise in Intel’s sales, amid expanding gross margins, Goldman says otherwise and that sales will be flat due to excess capacity.
Furthermore, Intel is expected to face problems dealing with better chips from their main rival AMD: while tablets are cannibalising notebooks with ARM kicking its tail in the mobile space.
Facebook Growth Very Good
May 3, 2011 by Mike
Filed under Around The Net
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Facebook Inc’s business is growing faster than forecast several months ago and the social media company is on track to surpass $2 billion in earnings before interest, taxes, depreciation and amortization in 2011, according to a story in The Wall Street Journal.
Facebook’s growth is above the growth projections that circulated when Goldman Sachs and Digital Sky Technologies invested in the closely held Internet company, the newspaper said in its online edition.
The newspaper did not indicate by how much Facebook may exceed those original expectations.