FBR notes, management offered gross margin guidance for 3Q13 of 36%, down 300 bps QOQ, and initial console APU operating margins of low double digits. The Street had been modeling operating margins in the high 20%s.
Opco notes AMD reported upside 2Q revenue/EPS of $1.16B/($0.09) vs. consensus $1.11B/($0.12). Mgmt guided 3Q revenue to $1.42B (+22% Q/Q), well above the Street's $1.23B (+11%) as initial game console builds for the PS4 and Xbox One commence. AMD's GM outlook of 36% (-350bp Q/Q) significantly underwhelmed consensus expectations of ~40% as low GM console revenue ramps. Firm estimates console GMs at 19%, roughly half of AMD's corporate average. With shares up 93% YTD, expectations were high into the call and Opco expects AMD to trade lower Friday following mgmt's disappointing GM outlook.
As mentioned earlier, AMD was downgraded to Underperform at Credit Suisse and AMD was downgraded to Underweight at Morgan Stanley.