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Sales of Advanced Micro Devices declined to nine-year-low in the Q1 FY2013, but the company remains moderately optimistic since it has won contracts to supply chips for next-generation game consoles from Microsoft Corp. and Sony Corp. However, sales of such chips will not completely offset declines in shipments of microprocessors for PCs and servers. Market analysts advice AMD to develop a competitive lineup of products to survive in the current situation.

AMD reported revenue for the first quarter of 2013 of$1.09 billion, an operating loss of $98 million and a net loss of $146 million, or $0.19 per share. The company’s sales results were lower than those in Q1 2009 (the worst quarter for the industry during the recent economic downturn) and those in Q1 2004, but still somewhat better than AMD’s sales in Q1 2003. In general, the situation may be not that bad as the company has competitive products in the pipeline and has a lot of opportunities with Microsoft Xbox Next as well as Sony PlayStation 4.

But there are challenges for AMD. The company supplies graphics cards that are very competitive with Nvidia Corp. and in many cases outperform the rival’s solutions. However, since 2006 the company has not even tried to compete against Intel’s high-end microprocessors. Currently AMD’s FX-series chips for desktops is officially positioned for enthusiasts, but its prices are set in between $101 and $195, Intel’s Core i3 and Intel Core i5 range. Moreover, AMD’s server microprocessor market share is now about 4.3%, down from 25% in 2006. Therefore, while AMD can offer the right products for the mainstream, it does not compete in the lucrative high-end part of the market. Financial analysts consider this a danger for the company as demand for mainstream PCs is slowing these days and game consoles are not going to offset those declines completely.

“I am really worried about the core business. They have actually lost more than a billion dollars from their core business over the last two years. Does that stop? I am not sure,” said Stacy Rasgon, an analyst at Sanford C. Bernstein, reports Bloomberg news-agency.

Other financial analysts also share the same opinion.

“We expect continued disappointing results in the PC segment to mitigate the impact of increased revenue from gaming,” said James Covello, an analyst at Goldman Sachs Group, in a report for clients.

Given AMD’s history, most analysts remain wary. About 71% of the 31 who cover AMD have hold ratings, while 16% recommend to sell the stock. The chip designer will have to show measurable benefits from game consoles and other new markets to prove that it can maneuver its way out of the shrinking PC market. The game console business is clearly a good start, since it actually has a huge impact on PCs, it is just the first step.

Tags: AMD, Business, ATI, Radeon, Fusion, Bulldozer, Piledriver, Orochi, Zambezi, Trinity, Llano, Brazos

Discussion

Comments currently: 32
Discussion started: 05/17/13 05:22:17 PM
Latest comment: 05/26/13 04:02:00 AM
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[1-7]

1. 
As usual some ANALists are profiting from down grading AMD stock. It's a disgrace how these shills manipulate public opinion and thus stock prices. How many millions of people got bilked with Apple stock when they bought at $600+ a share and now it's in the $400's?

I hope that the SEC starts investigating more of these scammers who mislead investors while profiting from their "ANALysis" commonly know as B.S., IMO.

BTW, I don't own any AMD or Apple stocks.
11 4 [Posted by: beenthere  | Date: 05/17/13 05:22:17 PM]
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Couldn't agree with you more beenthere. AMD is one of those stocks that is picked on and manipulated by the big hedge funds because that's how they make their money. If they left it alone, it would have a stable price - at the moment between $4 to $5. AMD will kick along on five bits of news in the next 12 months: -

1) Xbox announcement on the 21 May.
2) Apple going back to AMD graphics in Macbooks (because it wants to get serious about gaming).
3) Microsoft announcing AMD Kabini Surface Pro hybrid.
4) News of killer Kaveri chips @ 20nm invoking memories of AMD64 in 2003.
5) Solid news of 64-bit ARM server chips.

The stock will go even higher if news also emerges that Sony will use G series embedded APUs in next gen 4k TVs - implying a wider strategic alliance between the two companies.

I expect AMD shares to hit $12 - $14 in about 18 months, approximately Nvidia's price now (and Nvidia's will sink as it becomes apparent that it is losing the gaming market and it can't compete with other ARM designs - to eventually become a buyout target for Intel).
6 4 [Posted by: linuxlowdown  | Date: 05/17/13 11:48:48 PM]
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lol
0 0 [Posted by: beck2448  | Date: 05/22/13 12:27:58 AM]
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Well, what do you expect though? It's hard to give AMD a good rating when they're bleeding money year after year, quarter after quarter, with no end in sight. I agree with the analyst this time, it seems like AMD is not even trying any more.

Don't even get me started on Apple's stock. That company has been ridiculously overvalued for a number of years now. Their value dropped because Android has been steadily eating into their market share in the mobile device segment. Apple only has a handful of products and if demand drops or competitors take a big chunk of the market share then Apple's stock will collapse. Stop buying overvalued stocks and then you won't be losing sleep when analysts come out and tell the truth.
3 4 [Posted by: Kashim  | Date: 05/18/13 10:39:09 AM]
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@Kashim: "It seems AMD are not trying anymore".

Your opinion is baseless and whiffs of being anti-AMD.
2 4 [Posted by: linuxlowdown  | Date: 05/18/13 08:18:52 PM]
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The stock market is a gambling game. This gambling game requires some homework and some guts to either sell or buy. AMD does not have any predictable future, so it hard for anybody to invest. Of course people will sell their AMD stock. Any company that is as reputable as AMD and is doing poorly, will also have the same problems in stock market.

I do not have any stock, so I can say all I want.
0 0 [Posted by: tecknurd  | Date: 05/20/13 09:41:58 AM]
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2. 
They have not even tried? How biased is this article....

First of all Intel is a lot larger company then AMD and because of that AMD has done a damn good job keeping pace with Intel for the small amount of resources they have to work with against a tech giant like Intel over the years. Name another processing company that have came even close to competing against intel in all levels? None. So lets give credit where credit is due here.

Second, of all AMD has tried. To say they haven't tried is an ignorant statement. Their phenom II's were solid processors that competed well against the Core 2 Duo and Core 2 Quad lines of Intel. Their FX line is competitive with the Core I Series line of processors. Their budget apu's have been been highly competitive against intels budget core I series apu's. And their ultraportable apu's have blown intel Atoms out of the water.

Lastly, AMD has realized that it isn't about the performance crown anymore it's about optimization now. it's about producing a processor that can give the consumers decent all the way around performance with good battery life for a reasonable price. Intel is just now realizing this which is why with haswell they have focused a lot more on the battery life then raw performance due to the fact that ultra portable devices are becoming more and more popular with consumers, while the typical desktop pc devices are becoming less and less popular with consumers now.

AMD is heading in the right direction, their biggest mistake was trying to compete with intel in performance over the past 4 years that only pertains now to 10% of the actual consumers in the pc market while the rest of the 90% of consumers care less about raw performance and a lot more about battery life for their portable devices.
8 1 [Posted by: SteelCity1981  | Date: 05/17/13 08:05:05 PM]
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Unfortunately AMD's chips are slower AND use more power, a bad combination.
4 5 [Posted by: beck2448  | Date: 05/17/13 08:29:28 PM]
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not if you look at their ultra protable apu's the performance per watt are really good.
6 3 [Posted by: SteelCity1981  | Date: 05/17/13 10:02:03 PM]
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@beck2448 - That is the result of Intel being nodes ahead. But AMD actually make more powerful and power efficient CPUs at a given node. Compare Richland to Sandy Bridge @32nm, even with gate first rather than gate last HKMG. Intel gets to market first with lower nodes and therefore has the competitive edge, but their CPU designs suck. So what will the future hold? With AMD spinning off its fabs to Global Foundaries, the oil rich Arabs are heavily investing in keeping at least abreast of Intel's foundaries. Intel's competitive advantage in nodes will decrease, especially since they won't have as much money to invest in new nodes as the PC market shrinks and the fact they've failed in the mobile space to successfully combat ARM.
4 3 [Posted by: linuxlowdown  | Date: 05/17/13 11:41:43 PM]
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show the post
3 6 [Posted by: dinosore  | Date: 05/18/13 01:42:59 AM]
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No, I never joke. Piledriver was AMD's first design at 32nm. Richland is its second design at 32nm as like Sandy Bridge was Intel's second design at 32nm. Richland vs Sandy Bridge is therefore a fair comparison. What more handicaps do you think AMD should bear so Intel can come out on top? Some more corruption in the sales channels to ensure the hardworking AMD engineers get less of a R&D budget next year, perhaps?
3 2 [Posted by: linuxlowdown  | Date: 05/18/13 04:05:18 AM]
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Piledriver was amd's second deign at 32nm, bulldozer was the first. Richland is using piledriver cores on the CPU side so vishera is also a fair comparison to sandy bridge.

http://wccftech.com/amd-r...pu-radeon-hd-8000-series/

http://en.wikipedia.org/w...r_%28microarchitecture%29
2 3 [Posted by: dinosore  | Date: 05/18/13 07:42:12 AM]
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You're both wrong Llano was AMD's first chip on the 32nm design which was based off the Phenom II arch.

5 1 [Posted by: SteelCity1981  | Date: 05/18/13 12:20:36 PM]
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I admit I was wrong. Actually it's not the first time I've had this incorrect fact stuck in my head. Bulldozer was made at 32nm not 45nm and Llano was AMD's first design... this period in history coincides with a time in my life when I was out of action and off the air after a bad back injury... But I still contest that looking at Intel's and AMD's best designs at 32nm, AMD design is better. I wonder what Ivy Bridge would have looked like at 32nm.... Intel gets ahead by jumping down nodes regularly. But this habit is not going to last for much longer into the future as their fabs become unjustifiably expensive to retool.
3 2 [Posted by: linuxlowdown  | Date: 05/18/13 08:26:06 PM]
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Everyone is wrong from time to time it's apart of the learning exp and don't I know cause I was wrong a lot in last years fantasy football. lol
3 1 [Posted by: SteelCity1981  | Date: 05/18/13 08:51:46 PM]
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I'm very happy if people correct me because I only want to know the truth to make fair judgment, not just swallow Intel (or AMD) PR. Also, if you're into NFL, you might be interested in this http://www.youtube.com/watch?v=4a8Hgq29TV0. Seen it before?
3 2 [Posted by: linuxlowdown  | Date: 05/19/13 12:16:58 AM]
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Doesn't Intel's tick-tock cycle kind of make this comparison useless?

Plus I don't really see the point in comparing two architectures to see who's "ahead" unless they were released around the same time period.

I do wish AMD had kept it's fabs though.
3 2 [Posted by: Nihil  | Date: 05/18/13 06:25:14 PM]
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they couldn't afford to keep their fabs by selling them to global foundries it helped save amd from going bankrupt.
3 0 [Posted by: SteelCity1981  | Date: 05/18/13 08:50:30 PM]
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Doesn't Intel's tick-tock cycle kind of make this comparison useless?

Plus I don't really see the point in comparing two architectures to see who's "ahead" unless they were released around the same time period.

I do wish AMD had kept it's fabs though.
1 2 [Posted by: Nihil  | Date: 05/18/13 06:25:32 PM]
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That's the main concern for me too:Corruption in the sales channels and misleading information in the media on behalf of Intel and nVidia,which adopted the same sales "methodology" and I'm expecting someone to take care of this aspect. BTW, both companies seem to have inspired the "Apple effect" with lavish media support.
1 0 [Posted by: mosu  | Date: 05/19/13 10:46:22 AM]
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3. 
Yet to find one these chaps who has been right. Their track record of crystal ball gazing is a complete failure or if one believes the opposite of what they say one's chances of being right climb into the high 90's.
4 0 [Posted by: tedstoy  | Date: 05/18/13 12:56:19 AM]
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4. 
The console wins will only entrench AMD deeper into gaming and marketing for their Radeon audience... as for the general processing side, that's why AMD is rushing to merge their GPU and CPU completely and make them unidentifiable as individual products.

They are just playing the long term goals and trying to be first to market with new toys.
3 0 [Posted by: Johannesburg  | Date: 05/18/13 11:15:50 AM]
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5. 
It's just ignorant and unscrupulous for an ANALyst to bash AMD when they don't have a clue what's actually happening at AMD nor the fact that AMD has diversified and has significantly more revenue streams from new market segments than it's ever had before.

The bashing by the ANALyst is so that they can profit from short-selling stocks and by hyping Intel who is also suffering due to the world wide economic melt down and the fact they do not have a competitive laptop or desktop APU to counter AMD's which is literally changing the PC landscape for the better.
5 2 [Posted by: beenthere  | Date: 05/18/13 01:26:22 PM]
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Capitalizing the word anal is not as clever as you think it is.
3 4 [Posted by: Nihil  | Date: 05/18/13 06:19:31 PM]
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Because you are gay and take offense? It's a good jibe at these capitalists.
2 3 [Posted by: linuxlowdown  | Date: 05/18/13 08:22:14 PM]
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Why Nihil, why would you hit your head too hard and talk nonsense ?
2 0 [Posted by: Atlastiamhere  | Date: 05/20/13 05:12:28 AM]
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Analysts like PROFITS> AMD just had another terrible year and the worst quarter in 10 years. If the market doesn't reward AMD with sales, analysts will downgrade the stock. Its not a conspiracy.
1 0 [Posted by: beck2448  | Date: 05/20/13 08:18:49 AM]
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Again what I said is the stock market is a game. I am sure analyst looked at AMD's portfolio and sees no predictable future.

AMD's desktop APU suck compared to Intel and that is comparing AMD's best APU model. An i3 processor beats APU easily. Graphics really does not matter to 99% of the public. The mobile APU also have the same problem. Also APU require a lot of memory bandwidth and AMD does not have an answer to that and AMD still is going forward to introduce APU for FX models. APU are just bottleneck.
0 1 [Posted by: tecknurd  | Date: 05/20/13 10:10:44 AM]
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6. 
Based on recent articles XBit is now just another site posting flame bait, shit articles.
1 1 [Posted by: KeyBoardG  | Date: 05/20/13 07:04:22 AM]
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7. 
AMD should move to ARM(for micro server and mobile) in 2014 with globalfoundries 14nm-XM as soon as possible.
5 0 [Posted by: mudi1  | Date: 05/26/13 04:02:00 AM]
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