Ratings agencies issuing their opinions about chip stock Advanced Micro Devices, Inc (NYSE: AMD) would be some of the news for investors in the stock or in competitors like Intel Corporation (NASDAQ: INTC) and NVIDIA Corporation (NASDAQ: NVDA) will want to digest. I should mention that we previously had an open position in Advanced Micro Devices in our SmallCap Network Elite Opportunity (SCN EO) portfolio from last summer up until late January when we locked in a small loss. We got out not because we don't believe in AMD's long term potential, but because our SCN EO is a trading portfolio rather than a long term buy and hold portfolio. Moreover, AMD's shares had sunk again after the company reported earnings – a repeat performance of what happened after the last three previous earnings reports. Nevertheless, AMD has been producing a steady stream of good or interesting news for investors and traders alike:
Private Offering of $400 Million of Senior Notes. On Monday, Advanced Micro Devices announced it intends to commence a private offering of $400 million aggregate principal amount of senior notes due 2024. The net proceeds received will be used to repurchase outstanding 8.125% Senior Notes due 2017 through a tender offer launched June 2, 2014.
Moody's Issues a Rating. Moody's Investors Service assigned a B2 rating to the proposed $400 million senior unsecured note. The B2 rating reflects AMD's prospects for "improved profitability, free cash flow generation, good liquidity and lower leverage over the intermediate term." Moody's expects that AMD's continued execution of its product roadmap will lead to better overall profitability over the intermediate term. However, they also cautioned:
"Partially offsetting AMD's improving product mix development is the ongoing weak demand conditions in the personal computer market, particularly in the lower end segments where tablet devices continue to take wallet-share. Combined with our expectations that the market leader, Intel, will remain aggressive, AMD will be challenged to achieve profitability in this segment over the next year after losing $22 million in 2013. Recent design wins for AMD's dense server chips for mega data center applications (with Verizon) are promising, but we expect revenue contribution from this part of the server market will be very modest for AMD over the next 12-18 months as design cycles and customer validation and acceptance for mission critical server components are long."
Fitch Ratings Issues a Rating. Fitch Ratings has upgraded the long-term Issuer Default Rating (IDR) for Advanced Micro Devices to 'B-' from 'CCC' with a stable outlook rating and also rated the company's private note placement at 'B-/RR4'. Fitch Ratings specifically noted:
"AMD should resume positive revenue growth in the low- to mid-single digits in 2014, driven by strong graphics accelerated processing unit (APU) shipments. AMD's APU is designed into Microsoft's and Sony's newly released game consoles, which have significantly outsold previous generations to date and should add a degree of revenue visibility given longer product life-cycles. However, AMD's ability to offset continued weakness in legacy PC markets, which the company forecasts will decline by 10% in 2014, also depends on strong shipments of next-generation APUs for desktops, as well as solid adoption of just launched low power APUs for tablets and ultra-thin notebooks and discrete and professional graphics processing units (GPU)."
Opinions About Kaveri. Opinions about Advanced Micro Devices' all-new mobile APU platform, codenamed Kaveri, are trickling in with Michael Brown of PC World writing:
"I don't anticipate that mobile Kaveri will have Intel shaking in its boots—especially since AMD says it won't have any design wins to crow about until after Computex—but it looks as though the company does have a credible alternative to Intel's Haswell-class mobile CPUs."
Writing in CNET, Nate Ralph concluded:
"I'd like to be cautiously optimistic about AMD's chances, but we've already seen how Kaveri handles on the desktop: great performance (as compared to the previous generation), but still lagging behind similarly priced offerings from Intel. But maybe things are different with the move to notebooks -- and that means waiting for the system manufacturers like Acer, Samsung and Toshiba to show us what they can do with AMD's wares."
And in ExtremeTech, Joel Hruska concluded:
"Put them all together, and AMD has a better chance of matching Intel in the mobile sphere than it's been able to offer for several years. Exact performance comparisons will have to wait for shipping hardware, but the improvements here year-on-year are significant. Hopefully we'll see them shipping into hardware — mostly mid-budget laptops with half-decent gaming chops — in time for the back to school schedule."
Former Exec Rejoins AMD. Tech Report has reported that after a brief tenure working in Intel's graphics business, developer relations guru Richard Huddy is rejoining Advanced Micro Devices according to a company email they received which noted:
"After three years away from AMD, Richard returns as AMD's Gaming Scientist in the Office of the CTO - he'll be serving as a senior advisor to key technology executives, like Mark Papermaster, Raja Koduri and Joe Macri. AMD is extremely excited to have such an industry visionary back. Having spent his professional career with companies like NVIDIA, Intel and ATI, and having led the worldwide ISV engineering team for over six years at AMD, Mr. Huddy has a truly unique perspective on the PC and Gaming industries."
Huddy had joined Intel in December 2011 amid a series of prominent departures from AMD's executive team.
Share Performance. Advanced Micro Devices fell 0.76% to $3.94 (AMD has a 52 week trading range of $3.04 to $4.65 a week) for a market cap of $3 billion plus the stock is up 2.34% since the start of the year, down 1.5% over the past year and down 13.2% over the past five years. For reference, here is a look at the performance of Advanced Micro Devices verses that of Intel Corporation and NVIDIA Corporation:
Finally, here is a look at the latest technical charts for Advanced Micro Devices, Intel Corporation and NVIDIA Corporation:
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