AMDs Q115 Earnings To Be Impacted By PC Weakness & Seasonal Decline In Its Semi-Custom Business
1:49 PM ET 4/14/15 | TREFIS
AMD (NYSE:AMD) will report its Q1 2015 earnings on April 16th. The company witnessed a13% sequential and22% year-on-year decline in its Q4 2014 revenues,which was in line with company guidance.The steep top line decline was primarily driven bylower desktop processor GPU and semi-custom SOC sales. AMDs progress in diversifying into new markets and ramping PC and embedded design wins with key customers was offset by the ongoing weakness in its PC business (due to higher than optimal desktop and AIB (Add-In-Board) inventory levels in the channel)and itsover-concentration in consumer PCs. Despite a weak Q4 2014, AMD’s 2014 revenue grew (by 4% annually) for the first time since 2011, and the companydelivered its first full year of non-GAAP profitability in three years.
AMD expects lower PC sales and a seasonal decline in its semi-custom business to further lower revenues in Q1 2015. The company anticipates a 15% sequential decline (+/- 3 percentage points) in its revenue for the quarter. For fiscal 2015, AMD is concentrating on three key aspects: 1) reversing the decline in the PC business; 2) increasing R&D investments inenterprise, embedded and semi-custom devices; and, 3) diversifying its revenue base by growing in new markets. Just how the strategy plays out for the company as the year progresses will be of great interest.
Our price estimate of $4.12 for AMD is at a considerable premium to the current market price. We will update our valuation for the company after the Q1 2015 earnings release.
