AMD ($22) falls short, but shares go long
By Chris Kraeuter, CBS.MarketWatch.com
Last Update: 4:38 PM ET Jan 18, 2001
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SUNNYVALE, Calif. (CBS.MW) -- AMD shares tacked on 23 percent even though the chipmaker missed its expected per share earnings number and said it expects pricing pressures and lower margins in 2001.
The stock was supported by a couple of high profile analysts noting that, despite the company's outlook, the current share price represents a good buying opportunity.
AMD (AMD: news, msgs) shares rose $4.19 to $22.69 on volume of 21 million shares.
Analyst David Wong at SG Cowen reiterated his "buy" rating, adding that he thought the stock "represents good value at its current price." Merrill Lynch's Joe Osha said that at its current valuation, the market is "discounting an earnings implosion that we don't see happening."
The fourth-quarter numbers
On Wednesday evening, AMD reported fourth-quarter net income of $177.9 million, or 53 cents a share, compared with $65 million, or 21 cents a share, during the same quarter last year.
Revenue was $1.18 billion compared with $968.7 million during the same quarter one year ago.
AMD was expected to earn 55 cents a share on revenue of $1.22 billion, according to analysts surveyed by First Call/Thomson Financial.
The future outlook
For the first quarter of 2001, a traditionally slow quarter and a slower demand for PC products will combine to hurt PC processor sales, according to a company statement.
First-quarter sales are expected to be flat with the previous quarter.
For 2001, sales growth is projected at the high end of industry growth projections of 7 percent to 15 percent.
Assuming 15 percent sales growth, earnings will be about $2 a share, less than current expectations for $2.02 a share, according to analysts surveyed by First Call/Thomson Financial.
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