Friday, October 26, 2012

Advanced Micro Devices, Inc. (NYSE:AMD) Caught Up in Changing Market Trends and Low Cash Flow

Advanced Micro Devices, Inc.(NYSE:AMD) is presently facing issues due to a shifting technology landscape and lessening demand for personal computers. AMD is one of Intel’s biggest competitors. Cash flow went down to $1.5 billion in the 3rd quarter, with a decline of almost $279 million. The company is downsizing immensely to keep themselves afloat.

Stacy Rasgon, an analyst at Bernstein stated that the decline in the demand for PC’s happened quicker than anyone anticipated and there might not be time for a turnaround as it is in debt of around $2.04 billion. IHS ISuppli has predicted that the PC market will drop 1.2% to 348.7 million units this year. Rasgon reduced his rating on the stock to market perform in early October.

AMD’s cash flow is not promising, which is why analysts are wondering as to how it can launch new products and reduce expenses at the same time. AMD is trying to harness markets of industrial equipment, computer games and communications by tweaking current computer designs to incorporate them in new devices without extensive research and a total design revamp.

The AMD stock on the Philadelphia Semiconductor Index has performed poorly by undergoing a 61% decline through yesterday. The company feels that the last quarter of the year will be difficult as the PC market continues to struggle due to smarphones and tablets, which are manufactured using different chip technology.

Dell, Lenovo Group Ltd. and Asustek Computer Inc. are among PC makers that have said they will use phone-chip technology to build devices running Windows aimed at trying to pare the lead of Apple in tablet computers -- and have committed to using new low-power chips from Intel for that market.

Japan’s Fujitsu has apparently selected a brand new chip, known as Z-60, a combination of a microprocessor and graphics unit for a new tablet, which is a beacon of hope for AMD, but the company, needs to target the tablet market with better strategie sin order to strengthen its position.

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