- Eric Ross and Eddie Cheung from ThinkEquity are downgrading Advanced Micro Devices (AMD) from BUY to SELL and lowering price target from $30 to $20 as they believe AMD will suffer in 3Q06 and 4Q06 from several issues.
They believe the supply chain at Dell is incorporating AMD parts slower than expected (due to DELL-specific issues). AMD's margins are likely to be lower than expected due to a higher mix of laptop processors, and DELL revenues cannot make up the difference. And they believe AMD is still seeing pricing competition from Intel even though pricing cuts are slowing in the near future. A weaker antitrust suit against Intel and a much later trial date of 2009 are negatives as well.
Eric and Eddie note they heard in Asia that AMD is likely to suffer near-term from the DELL supply chain. Their sources in Asia"corroborated by sources in the U.S."have indicated to that DELL's ramp of AMD products is progressing more slowly than originally expected. Most of this is due to DELL-specific issues, with DELL losing share and in disarray. Unfortunately for AMD, these revenues will not likely be booked in any significant way in 2007. While this is not tragic, they believe when the Street begins to hear this from other channels, it will provide downward pressure on the stock.
They want to emphasize that this is a trading call, not a long-term investment call: They believe AMD is a solid company, with superior technology and a real chance to gain substantial market share over the next several years. In the near term, however, a challenging supply chain, mix/ margin issues and Intel's product refresh will most likely curtail AMD's share gains and/or profits.
Notablecalls: What a U-turn! Check out ThinkEquity's comments on AMD from last week. Or the week before. But, as Eric and Eddie note, this is a trading call. AMD is now heading lower, just as I suspected yesterday. And ThinkEquity seems to be beating all the other firms yet again (notice Citi upping their ests and tgts this AM, also BAC yesterday).
They believe the supply chain at Dell is incorporating AMD parts slower than expected (due to DELL-specific issues). AMD's margins are likely to be lower than expected due to a higher mix of laptop processors, and DELL revenues cannot make up the difference. And they believe AMD is still seeing pricing competition from Intel even though pricing cuts are slowing in the near future. A weaker antitrust suit against Intel and a much later trial date of 2009 are negatives as well.
Eric and Eddie note they heard in Asia that AMD is likely to suffer near-term from the DELL supply chain. Their sources in Asia"corroborated by sources in the U.S."have indicated to that DELL's ramp of AMD products is progressing more slowly than originally expected. Most of this is due to DELL-specific issues, with DELL losing share and in disarray. Unfortunately for AMD, these revenues will not likely be booked in any significant way in 2007. While this is not tragic, they believe when the Street begins to hear this from other channels, it will provide downward pressure on the stock.
They want to emphasize that this is a trading call, not a long-term investment call: They believe AMD is a solid company, with superior technology and a real chance to gain substantial market share over the next several years. In the near term, however, a challenging supply chain, mix/ margin issues and Intel's product refresh will most likely curtail AMD's share gains and/or profits.
Notablecalls: What a U-turn! Check out ThinkEquity's comments on AMD from last week. Or the week before. But, as Eric and Eddie note, this is a trading call. AMD is now heading lower, just as I suspected yesterday. And ThinkEquity seems to be beating all the other firms yet again (notice Citi upping their ests and tgts this AM, also BAC yesterday).
1 comment:
Had you any experience in the field, you'd know that firms do not issue press releases in case of rating changes.
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