Boston, MA 01/23/2014 (wallstreetpr) – Shares of Advanced Micro Devices, Inc. (NYSE:AMD) fell nearly 12 percent Wednesday despite the company’s widely positive Q4. The downfall of the stock occurred as the company announced weaker than expected estimate for Q1.14. As usual, investors are never excited by stocks which reveal weakening position.
Advanced Micro Devices, Inc. (NYSE:AMD) reported that its Q4 sales rose by 38 percent to $1.59 billion, exceeding $1.54 billion that analysts had expected. The company managed to stay in-line with analysts’ estimated net income of $45 million or $.06 per share for the quarter. Due to the low-margin gaming consoles AMD’s gross profit margin declined to 35 percent, losing a percentage in the process. Note AMD provides the semi-custom chips used in PlayStation4 (Sony) and Xbox One (Microsoft).
Q1 outlook
Generally, analysts expected Q1.14 to be a low-performance season for Advanced Micro Devices, Inc. (NYSE:AMD), and for that matter, they hoped the company would suffer 11 percent loss in revenue. However, AMD went as far as forecasting 16 percent loss in its revenue for the current quarter that concludes in the next three months. The company’s margin of error in the Q1 estimates is plus or minus 3 percent. Gross margin remains the same at 35 percent.
You can expect the stock to continue rallying south this week as analysts digest the new around the downbeat revenue forecast. Basically, at the moment Advanced Micro Devices, Inc. (NYSE:AMD) doesn’t seem much of a compelling stock to add to portfolio. Nonetheless, it is important keeping an eye on the stock this week.
Performance
What is not in doubt though is that Advanced Micro Devices, Inc. (NYSE:AMD) is making good progress if you take into account its performance over the past 12 months. The company suffered a loss of $102 million in the Q4.12 was it faced intense competition from Intel Corporation (NASDAQ:INTC) in the PC, server and graphics market.
The stock’s undoing at present is the $2 billion long-term debt pile. This could distract investors from making massive profits in the stock, but you can rest assured that long-term investors can still make good money trading Advanced Micro Devices, Inc. (NYSE:AMD).
