Among the recent news from chip stock Advanced Micro Devices, Inc (NYSE: AMD) was a partnership with ARM Holdings plc (NASDAQ: ARMH) that's intended to give the company a leg up on rivals like Intel Corporation (NASDAQ: INTC) and NVIDIA Corporation (NASDAQ: NVDA). I should point out that we previously had an open position in Advanced Micro Devices in our SmallCap Network Elite Opportunity (SCN EO) portfolio from last summer up until late January when we locked in a small loss. We bailed not because we don't believe in the company's potential over the long term, but because our SCN EO is a trading portfolio rather than a long term buy and hold portfolio. Moreover, AMD's shares had sunk again after the company reported earnings – a repeat performance of what happened after three previous earnings reports. With that in mind, here is a quick look at some of the latest good news AMD is producing:
Licensing Deal With ARM Holdings. On Monday, Advanced Micro Devices announced a deal where it will license chip technology from ARM Holdings plc, whose low-power chip technology is widely used in smartphones, tablets and energy-efficient servers, as part of a strategy shift to gain more business outside the slowing PC market. AMD's licensing of ARM's 64-bit architecture for the development of custom high-performance cores for high-growth markets will be at the center of a new product roadmap with the 64-bit chips expected to debut in 2016. AMD's CEO commented:
"AMD now takes a bold step forward and has become the only company that can provide high-performance 64-bit ARM and x86 CPU cores paired with world-class graphics."
However, Wired magazine pointed out:
It's the kind of bet AMD needs to make in order to gain ground against its longtime rival Intel, which has been beating it soundly in the server market for the better part of the past decade. But it's also a risky bet. Calxeda, another startup with a similar idea, went out of business late last year, after burning through an estimated $90 million in VC money.
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An Interview With Rory Read. CEO Rory Read, who joined AMD from Lenovo in 2011, was recently interviewed by the Wall Street Journal's Digits blog. He noted that when he first joined the company, 95% of the business was centered on PCs while today, non-PC markets account for 30% of revenues with the goal of having 50% of revenues from non-PC markets by the end of 2015. Read noted:
"I see the PC market continuing to shrink in 2014, kind of settling in somewhere between a decline of 7% to 10%. I think sales were a bit stronger to commercial customers than people anticipated going into the year. The last piece I'll say is I think you'll see further consolidation in the PC segment."
AMD Celebrates 45 Years Since Groundbreaking. May 1st marked 45 years when a group of former executives from the then industry leader, Fairchild Semiconductor, broke ground on a company that would eventually become the second largest chip maker in the world.
Upcoming J.P. Morgan Presentation. Senior Vice President and General Manager, Global Business Units, Lisa Su is scheduled to present at the J.P. Morgan Global Technology, Media and Telecom Conference at 9:20 am EDT on Tuesday, May 20, 2014. There will be a real-time audio webcast of the presentation on the AMD Investor Relations homepage: http://ir.amd.com.
Share Performance. Advanced Micro Devices is up 4.2% since the start of the year, up 11.4% over the past year and up 5% over the past five years. Here is a look at the performance of Advanced Micro Devices verses the performance of Intel Corporation and NVIDIA Corporation:
Finally, here are the latest technical charts for Advanced Micro Devices, Intel Corporation and NVIDIA Corporation:
SmallCap Network Elite Opportunity (SCN EO) previously had an open position in AMD. To find out what other open positions SCN EO currently has, and to learn why so many traders and investors are relying on this premium subscription service, click here to find out more.
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