Everyone needs a vivid digital experience — at least this is the basis of semiconductor innovations by Advanced Micro Devices Inc. (NASDAQ:AMD) as it pushes the envelope of accelerated processing units for a wide range of computing devices. The customer list of Advanced Micro Devices Inc. (NASDAQ:AMD) reads like the Who’s Who of gaming and graphics, starting with Apple Inc.
AMD also works closely with Microsoft Xbox One, Sony PS4 and Nintendo Wii U, all of which carry AMD technology on the inside. In fact, the company’s technology is now inside every major next generation gaming console and home entertainment system. The company provides better-faster-smarter graphics solutions so that gamers can take their PC gaming to the next level. Apple Inc. also plans to use AMD graphics cards in its redesigned Mac Pro, as the cards improve both the visual and computing performance, and they also provide the power needed by the digital content creators.
There is every reason for AMD to soar, and the company’s third quarter 2013 financials look positive, but GuruFocus research shows three severe warning signs, based on a thorough financial and performance checkup of the company. Advanced Micro Devices Inc. has a Piotroski F-Score of 2, which is low and usually implies poor business operations. AMD’s per share revenue has been in decline for the last five years, and the company’s gross margin has also been in long-term decline.
Here’s an attempt to understand the company's return to profitability, and look at some of this year’s guru trades.
Advanced Micro Devices Inc. (NASDAQ:AMD)
Predictability: 1 out of 5 Stars
Up 56% over 12 months, Advanced Micro Devices Inc. has a market cap of $2.39 billion and is traded at a P/B of 5.70. The company does not pay a dividend.
The current share price is around $3.34.
Incorporated in1969, Advanced Micro Devices Inc. is a global semiconductor company with facilities around the world. AMD's server computing products are focused on driving industry-leading cloud computing and virtualization environments. The company’s graphics technologies are found in a variety of solutions for game consoles, PCs and supercomputers.
AMD’s Third Quarter Financial Update
The company reported financial results for the third quarter of 2013 with revenue of $1.46 billion. AMD’s net income for the quarter was $48 million, with earnings per share at $0.06. AMD’s revenue has increased 15% over the same quarter of 2012. AMD’s gross margin was 36% in the third quarter of 2013.
AMD president and CEO Rory Read, commented in a company press release: “AMD returned to profitability and generated free cash flow in the third quarter as we continued to successfully execute the strategic transformation plan we outlined a year ago. We achieved 26 percent sequential revenue growth driven by our semi-custom business and remain committed to generating approximately 50 percent of revenue from high-growth markets over the next two years. Developing industry‐leading technology remains at our core, and we are in the middle of a multi‐year journey to redefine AMD as a leader across a more diverse set of growth markets.”
This year AMD also launched the industry's highest performance small core x86 server processor.
Tracking share price, revenue and net income:
Guru Action: As of June 30, 2013, the top guru stakeholder is Charles Brandes, who made a new buy of 41,700 shares at an average price of $3.46 per share, for a loss of 3.5%.
Across five losing quarters, Charles Brandes has sold out twice. Overall, on 41,700 shares at an average price of $3.46, he has averaged a loss of 3%.
After reducing his position by 90.28% in the first quarter of 2013, guru stakeholder Steven Cohen increased his position by 17.87%, as of June 30, 2013. He bought 3,843 shares at an average price of $3.46 per share, for a loss of 3.5%.
Across five years of trading, Steven Cohen has seen only four quarters with mild gains. Overall, he bought 11,321,732 shares at an average price of $7.05 per share and averaged a loss of 53%. He sold a total of 11,296,389 shares at an average price of $6.49 and also averaged a loss of 49%.
In the first quarter of 2013, Paul Tudor Jones sold out his position after 8 losing quarters out of 10 quarters total. In his last two quarters of holding, Paul Tudor Jones made gains. In the fourth quarter of 2012, he sold 128,100 shares at an average price of $2.37 per share, for a gain of 40.9%. In the first quarter of 2013, he sold 46,100 shares at an average price of $2.61 per share, for a gain of 289%.
Read more about the guru stakeholders and check out the company’s active insider trading.
GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction.
This feature is for Premium Members only. If you are not a Premium Member, we invite you for a 7-day Free Trial.
Become a Premium Member to See This: (Free Trial):
- List of 52-Week Lows, 52-Week Highs
- List of 3-Year Lows, 3-Year Highs
- List of 5-Year Lows, 5-Year Highs