Advanced Micro Devices Inc. (NYSE: AMD) caught even its less bullish skeptics off guard with its recent poor earnings announcement. The company even severely damaged the enthusiasm of its more bullish supporters, including our own view that AMD’s turnaround this time was very different. While AMD is still likely to have upside again, we can no longer consider AMD among the viable stocks that could double in 2014 — even if we think that AMD’s chance of doubling is a possibility on a longer-term basis beyond just this year.
24/7 Wall St. is showing which analysts made changes to their calls. We did not get to see every single note on the matter, but the reality is that you can see how disappointed the street was with the earnings report contents and in AMD’s guidance.
We have also added in our own color for a longer-term outlook, but we have skipped a recap of AMD’s earnings other than our own earnings report here. We also have simply linked to AMD’s CFO commentary as well. It is impossible to not have Intel Corp. (NASDAQ: INTC) covered in here when you view how the Intel earnings reaction was versus the AMD reaction.
As far as our own take, much of the positive development in PCs, servers, gaming consoles, graphic processor units and ultimately in mobile or communications got pushed out from a 2014 story to a later date on the sum of all moving parts of its business. We still like what the company is doing with its cash management and debt maturities (similar to what Sirius XM did). Still, our take is that AMD did reputation damage for turnaround investors in its report. We do not think that this is a fair assessment by any stretch, but it seems like investors betting on a turnaround are now thinking that AMD just cannot seem to shake the woes of yesteryear.
When we added it to the list of nine stocks that could double, AMD shares were at $3.50. They were at $3.83 as of Friday’s closing bell, after a 16% drop from the $4.57 pre-earnings close — on over 137 million shares! A volume spike of this magnitude (almost 5.5 times normal volume) implies that institutions and investors were exiting on a wholesale basis, and maybe that an already dominant group of short sellers is getting more confident.
Many analysts chimed in on AMD as well. Almost all were negative, as you might imagine. Here were some of the key report summaries we got a chance to review.