A Tale of 3 Tech Earnings Reports
Good news at IBM and Google, not really so much at AMD
By Louis Navellier
Jan 23, 2013, 3:05 pm EST
At first glance, it appears that tech bellwethers Advanced Micro Devices (NYSE:AMD), Google (NASDAQ:GOOG) and International Business Machines (NYSE:IBM) did quite well for themselves with their respective fourth-quarter earnings announcements.
However, while the headlines are strong, when I dug into the details I uncovered some fundamental differences between each of these companies’ operating results. When it comes to one of these stocks, I don’t want you to be lulled into a false sense of stability so let’s see what’s up.
Advanced Micro Devices
Shares of AMD are up as the company beat earnings and sales estimates by a hefty margin. Advanced Micro surprised to the upside thanks to various cost-cutting measures like workforce reductions.
Then again, that’s not saying a whole lot because the consensus estimate called for a 205% plunge in earnings and a 32% drop in sales!
Instead, Advanced Micro posted just a 167% drop in earnings (its net loss widened to $473 million) and a 31% dip in sales. While Wall Street may celebrating the earnings and sales surprises, I think it’s far too soon to whip out the noisemakers and party hats. After all, analysts expect Advanced Micro Devices to continue to hemorrhage money in the first quarter, with estimates calling for a 30% retreat in sales and a 233% nose-dive in earnings.
The Bottom Line
So despite the recent rally I consider AMD a strong sell and I don’t expect to change my recommendation anytime soon.