Advanced Micro Devices (NYSE:AMD) shares are not trading well despite its analyst meeting today.  The number two processor maker said they expect to be break-even in Q2 2008 and will show operating profits in Q3 2008.  There is just one small problem: this is hard to believe that the sales will ramp up enough and that the cost cuts or cap-ex will come in enough.

The CFO Robert Rivet said AMD expects sales to grow faster than the overall market in 2008, but no formal numbers were offered.  Same for margins.  What is interesting is that even with the delays the company reaffirmed its fourth quarter guidance.  Maybe they set the bar very low last time so they could at least meet targets.  An estimated $1.1 Billion cap-ex seems low for 2008, and that number may be too low for a company that is behind on its chips.

COO Dirk Meyer noted that the problems were related to design specifics that were straightforward to fix rather than manufacturing.  Our sources have noted the same that it isn’t the manufacturing, but we have been told from more than one familiar with the situation that an easily fix for the design teams just isn’t the case.  Either the company is right or our sources are, but based on the steady stock selling we are sticking with the opinion of our sources.

The one bright spot may be in graphics, and if the claims live up to snuff it can give NVIDIA (NASDAQ:NVDA) a run for its money.  Shares of NVIDIA are down 4% around $34.00 today (52-week range $18.69 to $39.67).

The Barcelona chip delay to Q1, although we are not necessarily trusting on this for any major production.  So this sounds like for the super-high performance quad core chips that Intel will get to keep its lead.  Intel is down about 1.2% today at $26.95, roughly in-line with the drop in the NASDAQ.

As far as what some of our cadre thinks:

• A person who regularly trades Intel and AMD stocks just sent me the best quote that would sum up this analyst meeting: "So, perhaps this was a Bullish meeting after all… but for Intel, not AMD."
• Another source did note that the company was at least more humble in this meeting and hardly mentioned Intel at all, although the ‘reiterated guidance’ may be hard to believe.

Maybe Mr. Ruiz doesn’t agree with the opinion of 24/7 Wall St. synopsis.  After all we are skeptical and still have more questions from the company.  Ruiz was after all one of our 10 CEO’s TO LEAVE IN 2008.

We just recently noted how AMD could actually see its stock double in our 10 STOCKS THAT COULD DOUBLE IN 2008.  But that is still by far more of an IF rather than a given.

Shares of AMD had been down almost 6% about 20 or 30 minutes ago, but now shares sit down 3% at $8.70.  Unfortunately that is still a new 52-week low close if this holds.

Jon C. Ogg
December 13, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.