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AMD's shares take a beating after tepid earnings [San Jose Mercury News :: ](San Jose Mercury News (CA) Via Acquire Media NewsEdge) July 18--SUNNYVALE -- The stock market severely pummeled Advanced Micro Devices on Friday -- sending the chipmaker's shares plunging more than 16 percent -- a day after it reported second-quarter earnings and projected third-quarter sales that dismayed some Wall Street analysts. Despite sales of $1.44 billion for the last three months that represented a 24 percent jump from the same period a year ago, the Sunnyvale company lost $36 million. And its tepid forecast of a 2 percent rise in sales for the next three months was less than many analysts had been expecting. In a note to his clients, Bernstein Research analyst Stacy Rasgon termed the results "absolutely woeful," especially since AMD's PC-related chip sales dropped, while Santa Clara-based Intel -- AMD's much bigger rival -- recently reported an increase in its PC-chip business. "At this point, it's becoming (or should be becoming) glaringly obvious that the company's PC position is getting increasingly tenuous." Some analysts noted that Intel benefitted from a recent upturn in personal-computer purchases by businesses, while AMD's chips are used more heavily in consumer PCs, which have become less desirable due to the surging popularity of smartphones. Because of that trend, AMD has been striving to find a wider array of applications for its microchips. Among other things, it has been promoting its circuits for use in computer servers, medical imaging equipment, digital signs, automotive infotainment systems, smart appliances, industrial gear and video game consoles or other graphics-rich devices. Nonetheless, "While the company is making progress on diversifying its business away from the PC market, overall execution remains uneven," concluded BMO Capital Markets analyst Ambrish Srivastava. Craig Berger of Hedgeye Risk Management was similarly unimpressed, warning his clients that AMD "has difficult days ahead." But Canaccord Genuity analyst David Evanson was more positive, commenting in a note that "AMD's diversification strategy remains on track and positions the company to drive steady long-term top-line growth and a return to sustained profitability." Hans Mosesmann of Raymond James Equity Research added, "we believe the company is indeed executing well." At the close of trading, AMD's shares fell 74 cents to $3.83. Contact Steve Johnson at 408-920-5043. Follow him at Twitter.com/steveatmercnews. ___ (c)2014 the San Jose Mercury News (San Jose, Calif.) Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com Distributed by MCT Information Services |