Semiconductor company Advanced Micro Devices (NASDAQ: AMD) released their fourth quarter and 2014 fiscal year earnings report on January 20th, which was tainted with many losses.
AMD’s Q4 report posted revenue of $1.24 billion, a 13% sequential decrease and a 22% year-over-year decrease. The company had an operating loss of $330 million and a net loss of $364 million, compared to an operating income of $63 million and a net income of $17 million in the same quarter of last year. Debt also increased in the fourth quarter, posted at $2.21 billion compared to a flat balance in the prior quarter.
For fiscal year 2014, AMD posted revenue of $5.51 billion, a 4% year-over-year increase. However, AMD posted an operating loss for FY2014 of $155 million, compared to an operating income of $103 million in 2013. Net Gross margins and net loss also decreased compared to the 2013 figures.
For the first quarter of 2015, AMD expects a 15% (+/- 3%) decrease in revenue from Q4 2014.
Dr. Lisa Su, AMD CEO, stayed positive and noted, “Annual Enterprise, Embedded and Semi-Custom segment revenue increased over 50% as customer demand for products powered by our high-performance compute and rich visualization solutions was strong. We continue to address channel headwinds in the Computing and Graphics segment and are taking steps to return it to a healthy trajectory beginning in the second quarter of 2015.”
Lisa Su has been trying to reinvigorate AMD, which is a smaller-size rival of Intel (NASDAQ: INTC). AMD’s third quarter 2014 report announced that the company had “reorganized into two business groups, one focused on the traditional PC market and the second focused on adjacent high-growth opportunities.” After the change, three executives left the company to pursue new opportunities, according to a spokesperson earlier this month.
On January 21st, analyst Joseph Moore of Morgan Stanley reiterated an Underweight rating on AMD and lowered his price target to $2.25 from $2.50. In response to AMD’s Q4 report, Moore noted, “AMD had a difficult quarter, with an inventory write down and 1Q revenue guidance 15% below [The Street’s estimate], given ongoing share loss in PCs (both CPUs and Graphics).” He continued, “They did avoid foundry penalties, a modest positive. We still think the bull case is not that compelling, and maintain our UW rating.”
Joseph Moore has a 51% overall success rate recommending stocks with a +8.3% average return per recommendation.
Separately on January 21st, analyst Christopher Rolland of FBR Capital reiterated a Perform rating on AMD with a price target of $3.50. Rolland also issued the rating in response to the company’s Q4 report, noting results were “generally in-line” with expectations but Q1 guidance was “significantly worse than expected as compute and graphics (C & G) shipments are affected by substantial channel inventory. Furthermore, C & G operating losses fell meaningfully into the red, a hole we think will be difficult to emerge from in the near term.” Moving forward, Rolland would have liked to see “deeper opex cuts” due to the “magnitude of the miss.” The analyst concluded, “Overall… the company has wisely directed its strategic focus away from the core PC market and toward gaming APUs, microservers, and custom- embedded processors, areas on which its larger competitor is less focused. However, we now believe much of this transition has already played out, with visibility into meaningful peak earnings elusive.”
Christopher Rolland has a 65% overall success rating with a +9.4% average return.
On average, the top analyst consensus for AMD on TipRanks is Moderate Sell.