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Advanced Micro Devices, Inc. (NYSE:AMD) Expected To Gain But Not Near Term Profits

Boston, MA 10/14/2013 (wallstreetpr) – Sony had announced that it was on the way to ship 5 million units of game console by the end of its financial year that is by the end of the March quarter. Analysts are of the opinion that the gross margins for the custom game console processors of Advanced Micro Devices, Inc. (NYSE:AMD) are quite below the corporate average of 23% for the year 2013. Nevertheless, some are also estimating that they will show better results throughout the year 2014 with ramping volumes and improved yields. According to some analysts for about every 0.5 million units shipped and 80 basis points of gross development, the company could add an extra $0.01 to analysts’ CY14E EPS estimate.

AMD had recently initiated a lot of new graphics chips. This could push the company to earn some share by the end of the fiscal year 2014. While it is estimated that by 2014 the company’s share will improve by 39%, looking back, we can see that it had recorded the lowest fall to 35% in 10 years this year.

It is expected that the low end PC market will become more competitive. Intel is introducing its next generation mobile processor which is called Bay Trail in 2013. This can configure notebooks and convertible PCs at remarkably low points. AMD has massive exposure to the low end PC market and hence must expect increased race by others in the field.

AMD is planning to introduce an ARM based server part called Seattle in 2014 in the microserver market. This however will have limited impact as by then customers would have built out the software ecosystem and would have debugged initial product queries.

Concluding on the above points, analysts prefer to rate the AMD stock neutral. While on one hand the company’s game console and graphics business seems promising, there on the other hand, concerns are raised in its core PC and server business in 2014.

Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing.

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