How Bad Can AMD Get?

4/8 - "Analyst Doug Freedman of American Technology Research welcomed AMD's cost-cutting news. "AMD hasn't been efficient with the workforce it has," he says. "I don't think this cut will be material to its ability to be effective. It will emerge leaner and meaner. We saw what this did at Intel after it started cutting jobs that amounted to 20% of head count." Freedman rates AMD stock a buy with a price target of $10.

Earlier in the day, before AMD's announcement, Lehman Brothers (LEH) analyst Tim Luke said in a research note he expects AMD's share in the PC and server microprocessor market to fall by 1.5%, worse than the previously expected drop of 1%. Luke said that Intel has been increasingly competitive in both servers and "value" desktop PCs—that is, those in the lower price ranges—market segments where AMD had made gains against Intel during the prior two or three years.

A weaker outlook for U.S. consumer spending has only hurt AMD's results further, Luke wrote."

4/8 - "Final Move: Advanced Micro Devices (AMD), Intel (INTC)

Cramer finished Monday’s program by putting Hector Ruiz on his CEO Wall of Shame and said he prefers INTC."

4/8 - "AMD negatively pre-announced Q1 revenues on weak end market demand. This conforms to our view that PCs along with wireless handsets are likely to drive negative earnings revisions in the first half of 2008....maintaining a Hold rating."

"We are lowering our estimates...Revenue: Q1 C2008E from $1.66 billion to $1.5 billion; C2008E from $7.145 billion to $6.402 billion...EPS: Q1 C2008E from ($0.31) to ($0.44); C2008E from ($0.57) to ($1.26)...Price target remains $6.50, and equates to a market cap of 0.6x our C2008 revenue estimate."

"Other semiconductor names may be at risk from a weak PC environment, including Intel (INTC : NASDAQ : $21.75 | HOLD) and NVIDIA (NVDA : NASDAQ : $19.23 | SELL). Recent checks with Asian ODMs emphasized a negative Q1 outlook. Our checks indicated a sequential decline of 15% for motherboard shipments in Q1 and slightly worse for notebooks due to order push outs."