AMD Warns, Stock Holds Fast. Has the Market Priced In All the Bad Chip News?
By Caroline Humer
Senior Writer
12/11/00 8:41 PM ET
Chip giant Advanced Micro Devices (AMD:NYSE - news) on Monday joined the fray of semiconductor and computer companies warning their results will fall short this quarter because of slowing PC demand.
Apparently AMD did well coming out with the news after competitor Intel (INTC:Nasdaq - news) and PC makers like Gateway (GTW:NYSE - news). AMD's stock was barely changed in after-hours trading, holding on to the near 8% gain it picked up during regular trading Monday.
The reaction was similar to trading in Intel after it came clean on the quarter. It has withstood downward pressure after warning warning last Thursday night that revenue would be flat this quarter. In fact, buyers seem to be getting in despite the bad news -- Intel has gained almost 16% since it came out with its poor forecast.
AMD said Monday that it expects fourth-quarter sales to be flat to nominally higher compared to the most recent quarter ended Oct. 1, when it booked $1.21 billion in revenue. The company also said it would miss earnings per-share estimates substantially, with results hitting the range of 50 cents to 60 cents a share depending on how the PC market shapes up. Analysts had expected earnings of 68 cents a share, according to First Call/Thomson Financial.
AMD's shortfall didn't surprise analyst Mark Edelstone of Morgan Stanley Dean Witter. In a note Monday morning lowering expectations for growth in semiconductor revenue in 2001 to 15% to 20% from 25%, Edelstone said he expected about half of the more than 30 companies he follows to come short of estimates this quarter. AMD was in that group. (Morgan Stanley hasn't done recent underwriting for AMD.)
But he also said that he thought most of the bad news had already been priced into most semiconductor stocks. Still, Edelstone doesn't see a sustained rebound in semis -- more of a six-month trading range.
AMD wasn't the only semiconductor stock to report Monday that it was growing slower than expected. Microchip Technology (MCHP:Nasdaq - news) said Monday that it expects sales during the current quarter to be flat with the most recent quarter's $176.3 million because of inventory buildup among its distributors. Unlike most of the other semiconductor stocks, Microchip was down in after-hours trading on the news, after having given up 9% Monday during regular trading.
Anadigics (ANAD:Nasdaq - news), which makes chips for the telecommunications sector, said it expects to produce a loss of 3 cents a share, instead of breaking even.
Dallas Semiconductor (DS:NYSE - news) also chimed in, saying it expects sales in the fourth quarter to be down 5% to 7% from the previous quarter's $139.5 million. Earnings are seen at 34 to 37 cents a share. Both Anadigics and Dallas were unchanged in after-hours trading. |
