After bad news from its larger rival Intel (INTC), AMD (AMD) backed its own forecasts. AMD has its new Opteron processors. According to the company, the product has up to 20% faster performance with 35% less power-consumption when idle compared to the previous generation. But, the market found it hard to believe that AMD could do well while Intel does poorly. In a sense, that was right. Just days ago, The Semiconductor Industry Association said sales chip sales revenue would fall 5.7% next year.
AMD’s shares currently trade at $1.85. Less than two years ago, the stock was at $22. AMD has replaced its CEO, but it cannot replace its balance sheet with $4.9 billion in debt and its P&L which move from losses to tiny operating profits from quarter to quarter.
Wall St. have thrown in the towel on AMD. It makes perfectly outstanding products, but it is up against a company which has 80% of the global market and a substantial balance sheet. Investors don’t think AMD can maneuver into a really competitive position with its boat anchor of financial obligations.
Douglas A. McIntyre