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Advanced Micro Devices, Inc. Message Board

  • mikemakeavoice mikemakeavoice Jan 27, 2014 6:02 PM Flag

    AMD valued at 1.5x quarterly revenues

    You know how ridiculous this market cap of a quarter and a half revenues is?
    Anyone who owns a business knows.
    Even the enterprise value states 3.6Billion.
    Subtract AMD cash from debt, and you basically have an insanely oversold evaluation.
    It's a joke. AMD will return to 1.0 yearly revenue atleast.
    Roughly a market cap of 6B
    a 1B debt (debt less cash) is not going to sink this gigantic ship. I've seen companies with much much worse debt survive, with way less growth and way less turn around opportunity.

    Look at BESTBUY, they failed to turn around their profits, and they still ran from $10 to $40 (back to $25) recently.
    I'll hold and buy more for however long this takes to show real value.
    I'm up 50% even today because of still holding some $2 AMD stock.
    I'm not giving up any of it unless it's over 6B market cap. I can't justify selling it for less than I know it's worth.

    Sentiment: Strong Buy

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    • AMD's foward EPS will be about .25-.30.
      Companies that gets out of the hole are trading about 25-35x earnings multiples.
      Price of sale is way low.
      More upside potential than down.

      So what if they lose 8%/yr loss sequentially on PC/Laptop?
      They are doing far better than 16%/yr growth annually.

    • That's actually richly valued when you consider that the company has over $2 billion in long term debt, half of which comes due next year, and a credit rating in the near-bankrupt sub-junk levels. Debt exceeds cash more than 2:1 and management guided for a likely loss in Q1 showing that the semi custom business can't keep the company afloat.

      I've seen takeovers under circumstances like these where the buyer offered less than market value for the shares and was able to close the deal. AMD is definitely a distressed company running solely on "other people's money" and unable to self-sustain from its operations (even if it has zero debt instead of 2x as much debt as cash).

      The other thing that prevents a better valuation for AMD is the fact that it depends more than 90% on x86 for ist revenues and the change in control clause in the Intel x86 patent license gives Intel a veto over any attempted buyout of AMD. The onlt money making asset AMD owns is its ability to make Intel-architecture chips, and that very asset can't be taken over by a would-be buyer without Intel's say-so.

      I expect the stock to trade down through the rest of the year, reaching sub-dollar levels in Q3 before bouncing back a bit in Q4 with the uptick in console sales for Christmas and the debut of AMD's 64-bit ARM server chip. The server chip will be DOA from a a market perspective, built on inefficient 28nm process and going up against Intel's Avoton on 14nm process, but the hype and speculation should be good for a modest pop before reality sets in.

    • also, can ANYONE show me ANY other company with a market cap of just 1 quarter revenue?

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