AMD (AMD): No PC Bottom In Sight
April 22, 2009 by Douglas A. McIntyre
Intel (INTC) sees a bottom to the falling demand for PCs. Smaller competitor AMD (AMD) does not. During the Intel earnings conference call, the company’s CEO said that PC sales had leveled off. Contrasting that the CEO of AMD who said, “I don’t know how anybody can say that we hit bottom given the continued uncertainty that we have in the macroeconomic climate,” according to Reuters.
If AMD is right, it may be penning it own obituary. The company lost $416 million on $1.18 billion in revenue in the latest reported quarter. AMD says it needs $1.3 billion in sales to break even and it is forecasting that Q2 sales will be worse than Q1. That means the firm continues to burn cash and may continue that for the rest of the year and into 2010 depending on how long it takes tech spending to rebound.
AMD has filed antitrust suits against Intel and the EU is pursuing the charges aggressively. But, unless AMD can get substantial damages from any legal action, its balance sheet will get worse by the month.
AMD’s core business will not go away. It has about 20% of the PC and server chip markets. That is a valuable franchise. Another company will buy that business and leave behind AMD’s awful balance sheet. AMD does not have long to live as an independent company.
Douglas A. McIntyre
Sponsored: Attention Savvy Investors: Speak to 3 Financial Experts – FREE
Ever wanted an extra set of eyes on an investment you’re considering? Now you can speak with up to 3 financial experts in your area for FREE. By simply
clicking here you can begin to match with financial professionals who can help guide you through the financial decisions you’re making. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.