How are they going to keep up with Intel by cutting Capex?? Changes to "operational model" may mean they are going to shift focus to a profitable co-existence... just my speculation.
An interesting analogy, but not an entirely accurate one... whales evolved independently of barnacles... but that doesn't hold true when the whale is Intel.
Surely you don't think we'd have sub $200 C2Ds all over the place if it weren't for the X2s?
Having read through some of the news this morning, the concensus is a loss of 0.30/share on 1.55 Billion revenue.... this will stretch that lost abit past concensus.
Jack
"Abit"? It will be closer to double that concensus number. There was little savings from marginal cost of production associated with that lower revenue, it was simply a product of lower prices on their production. Thus, most of that lowered revenue will be coming straight off of AMD's bottom line, minus whatever whatever expenses they managed to cut last quarter.
lol - stock is up .50 - Sometimes I just dont get the market...
Wall Street already knew what crap this quarter was going to be, that's why AMD's stock has been falling relentlessly. This is AMD management's first acknowledgement that they are in deep **** and can't just continue like all was fine and dandy. It is also a must before any equity offering. No one is going to throw money into a hole unless there is a plan for plugging that hole up. That said, I think AMD is going to find raising money a lot harder than they had anticipated, this may also be an acknowledgement of that as well.
Short covering. Once the news like this breaks, if you are short the stock, you go ahead and cover on the news and lock in your profit. Don't expect this to be a trend reversal as Q2 is probably gonna be even worse (seasonally slowest quarter with more pricecuts on the way.)
lol - stock is up .50 - Sometimes I just dont get the market...
Anytime a company "restructures" this usually lead to increase in stock price. It usually reflects the stockholder's confidence a company is getting beter organized.
Cutting capex by $500MM this year, freezing all new hirings... no word on cash flow or losses.
I imagine that the cut in CAPEX will translate directly to a delay in the 45nm node transition. They're probably putting off the purchase of the expensive immersion lithography tools etc. Personally, I think 2008 may continue to be a bloodbath for AMD as Intel ramps 45nm quad cores and AMD is stuck with large 65nm dies because they can't afford to transition.
I was just trying to buy on that little pre-market dip for a minute, and the baby was crying, and wife needing help. I made the right decision of course. First things first.
I think this included some short covering, although it appears there could be institutional buying. Just guessing.
Short covering. Once the news like this breaks, if you are short the stock, you go ahead and cover on the news and lock in your profit. Don't expect this to be a trend reversal as Q2 is probably gonna be even worse (seasonally slowest quarter with more pricecuts on the way.)
While you got some correct ideas, be careful not to convince yourself of something. The market makes a hash outta all the ideas about what is supposed to happen.
lol - stock is up .50 - Sometimes I just dont get the market...
Anytime a company "restructures" this usually lead to increase in stock price. It usually reflects the stockholder's confidence a company is getting beter organized.
Last I looked it was up .67. Really should have bought that 1,000 shares on Friday, then sold now and made some quick cash.
My thoughts - the slashing of the capex and "restructuring" probably means that AMD is finding it very difficult to secure additional financing.
We won't know till the conference call what the cash flow was for the quarter... like I've said before, I'm waiting for that call before assessing an investment strategy.
Deadcat bounce??? Short Covering??? Buyout??? meh...
Be careful of claims of "cash on hand"... Many companies tout this number as a "Hey we are still healthy" but it normally means they are on the ropes financially. Please reference MCI prior to filing for bankruptcy and declaring +11B in fraud.
If AMD continues to bleed expect one of two things to happen:
1) AMD to restructure under bankruptcy while shedding a LOT of debt. Emerging as a stronger company with a better defined "Laser like" vision.
2) AMD to entertain offers from courters. This will likely only pad financials for a short time which will likely lead BACK to number 1. The only way for this to NOT end up in category 1 above is for the purchasing company to do a GREAT job restructuring without/before bankruptcy.
Heed my words "Cash on Hand" statements are a true sign of weakness when a company has multiple declining quarters like have just been stated.
But do not fear AMD will be around and will still compete (just their financials will not be able to compete for a while).
On the note of Capex cuts... This also eludes to a a short term financial goal rather than the long term. This will allow stockpiling of cash to sweeten the pot for courting companies.
Those folks thinking of investing just understand what you are getting yourself into and be prepared to take a loss.. But really be prepared to GET OUT before a restructuring under bankruptcy happens. This scenario = NO MONEY FOR YOU.
To short Capex right now kinda tells me that AMD is not looking to fight this generation of processors from Intel... They are banking (literally) on Barcelona bringing about a brief period of breathing.. To again shore up that healthy but on the ropes image.
On the note of Capex cuts... This also eludes to a a short term financial goal rather than the long term. This will allow stockpiling of cash to sweeten the pot for courting companies.
Those folks thinking of investing just understand what you are getting yourself into and be prepared to take a loss.. But really be prepared to GET OUT before a restructuring under bankruptcy happens. This scenario = NO MONEY FOR YOU.
To short Capex right now kinda tells me that AMD is not looking to fight this generation of processors from Intel... They are banking (literally) on Barcelona bringing about a brief period of breathing.. To again shore up that healthy but on the ropes image.
Just my .02
I'm thinking they're heading towards Chapter 11... just awaiting the conf call to see how fast cash is draining. Restructuring actually COSTS money short term (e.g. severance, lower productivity) - so the effects may not be so dramatic during this "survival phase".
I also agree with you, the capex cuts is a move of utter desperation. It may help them survive another few quarters, but at the cost of being obsolete with Intels very aggressive "tick/tock" strategy.
If the earnings call is poor, I'd go short (probably with LEAPS). If it's good, I'd have to assess whether the stock will stagnate or appreciate.
On the note of Capex cuts... This also eludes to a a short term financial goal rather than the long term. This will allow stockpiling of cash to sweeten the pot for courting companies.
Those folks thinking of investing just understand what you are getting yourself into and be prepared to take a loss.. But really be prepared to GET OUT before a restructuring under bankruptcy happens. This scenario = NO MONEY FOR YOU.
To short Capex right now kinda tells me that AMD is not looking to fight this generation of processors from Intel... They are banking (literally) on Barcelona bringing about a brief period of breathing.. To again shore up that healthy but on the ropes image.
Just my .02
I would imagine long term planning at AMD is confined to making it to 2008 with a company that can still be sold at this point. With cuts in Capex and jobs they appear to be dropping out of the CPU race with Intel and refocusing on a lower mean price product. The job cuts preclude the possibility of selling off ATI as a complete company as all the redundant operations are being cut out which makes it tougher for venture capital to scoop up AMD and dice it up into saleable pieces.
I would guess we are going to see a restructured sale of AMD shortly where the shareholders get wiped out with the new investors putting money in and taking stock and options against that money.
The extreme lack of benchmarks would indicate that AMD's last gasp processor "Barcelona" is not going to blow our sock off but just squeak ahead of Core2Duo and then they have nothing to follow up against Penryn.
