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Consumer Electronics

Fab-Lite Model at AMD Bites Back (AMD, INTC, HPW, DELL)

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By Jon C. Ogg Updated Published
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Advanced Micro Devices, Inc. (NYSE: AMD) has some good news and some bad news.  The bad news is that it is going to miss its third quarter sales and income targets.  The good news is that this looks to be due its own situation rather than something ominous that would drag down the larger Intel Corporation (NASDAQ: INTC).  It also is not an imediate omen for Hewlett-Packard Co. (NYSE: HPQ) and Dell Inc. (NASDAQ: DELL).

AMD blamed a manufacturing glitch for its miss, and the new target is 4% to 6% growth versus a prior target of closer to 10% sequential growth.  Gross margin will also fall to about 44% to 45% rather than a 47% target previously offered.  The blame lies with the Globalfoundries plant in Germany.

Having a fab-lite model is great, when the factories are working properly.  In this case, not so much.

AMD shares are down 9.4% at $5.57 in pre-market trading and the stock has traded more than 3 million shares with an hour until the open.  The prior 52-week low was $5.60.

JON C. OGG

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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