AMD (AMD): Still In The Woods Without A Guide

April 18, 2008 by Douglas A. McIntyre

The good news about AMD’s (AMD) first quarter news was that the bad news was not worse.

The Intel-Jr. of the chip world reported Q1 2008 revenue of $1.505 billion and a net loss of $358 million, or $0.59 per share. The company’s explanation for the bad results was barely in English. A seasonally weak first quarter was amplified by a challenging economic environment for consumers and lower than expected revenues of previous generation products, resulting in lower than expected revenues in all business segments."

Guidance for the next quarter was, in a word, poor.

AMD’s results bring Wall St. back to the question of whether the company can stay independent. AMD was supposed to have an OK year and start to chip away at some of its $5 billion in debt. Operating losses make that very hard to do. Refinancing the debt in the current credit environment might also be tough.

As the year wears on and AMD’s number stay weak, the firm may only have two choices. One would be to sell itself to a better-financed chip company like Nvidia (NVDA) of Texas Instruments (TXN). There are also large chip companies in Asia which might kick the tires.

AMD’s other option is to try to auction off its graphics chip operation, ATI. It bought the firm for too much money about two years ago. But to sell it, even with a big haircut, might allow the parent to clean up its balance sheet.

One thing is for certain. AMD will look much different by the end of the year.

Douglas A. McIntyre

Sponsored: Want to Retire Early? Here’s a Great First Step

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

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 you build your plan to retire early. 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.