Monday, December 3, 2012

Advanced Micro Devices, Inc. (NYSE:AMD)’s fall and how it can rise?

Chip maker Advanced Micro Devices, Inc.(NYSE:AMD) has been one of the worst performing stocks this year having plunged nearly 60 percent so far.

The stock touched a high of $8.20 in March and since then it has been a one-way trend downward, testing a historical low of $1.80 a share.

Has AMD Found The Bottom and Ready To Hit $3? Find Out Here

AMD has been hit more than the other players such as Intel and Nvidia by the slowdown in the sale of personal computers and laptops and this has had an effect on its financial performance as well.

Last month for the fourth consecutive quarter, the company reported a drop in its revenues.

There were reports recently that the company has engaged investment bank J P Morgan to consider various strategic options for the company including a sale. However since then AMD has denied that it is pursuing any sale of the company or its assets.

Investors have also turned away from the company which has been hit by scanty cash reserves, piling debt and negative cash flows from operations.

Forbes which did an analysis of the reasons for decline of the stock said that the main factors responsible are - decline in global PC shipments, leadership issues and a lack of strategic decision making, delays in shipments due to manufacturing problems and problems in execution and lack of presence in the upper end of the PC market.

According to Forbes the stock price could get a boost from its new Steamroller architecture which offers significant performance per watt improvement and a stronger battery life, offering higher efficiency compared to its Bulldozer and Piledriver architectures.

Collaboration with ARM could give its serve business a new life while its graphics card business could give serious competition to Nvidia with the launch of GPUs.

1 comment:

  1. I would also look at the fact that AMD processors are in all 3 of the next generation video game consoles.

    1)Nintendo's Wii U, which just released has an AMD GPU (graphics processing unit)
    2)Microsoft XBox 720, which will most likely be released in quarter 4 of 2013, is rumored to use AMD for both the CPU and GPU, but at minimum the GPU
    3) Sony Playstation 4, which will most likely be released quarter 4 of 2013 alongside the new XBox 720, will have an AMD GPU

    Whether AMD get's a royalty, profit strictly from the sale of the processors, or lump sum for the design and sale of the processor, the sales of the new video game consoles will help AMD get back on their feet.

    Dell is also beginning to push AMD processors in a lot of their new servers.

    I only see the AMD stock to go up from here within the next 2 years at minimum.


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