The AMD Execution Thread [2007 - 2017]

The important things as I mentioned before from that is that Mubadala are freeing up share ownership so that they can exercise the warrant in part or in full at some point in the future.

Seeking Alpha speculates that because of this Mubadala could potentially exercise 50 million share in a few months. However, if that was what Mubadala was planning to do, they had no need of selling 45 million shares to Goldman Sachs. Had they kept all the shares, they still would have been below 19.99% share ownership if they were to only buy 50 million shares.

All this, IMO, is just Mubadala

1. Freeing up shares so that if needed they can exercise the full 75 million shares when they find it advantageous to do so. Without doing this they would not have this flexibility.
2. Take advantage of Goldman Sach's desire to purchase a large block of AMD stock.

It's difficult to read much more into it. As the article notes, the warrant must be executed prior to Feb. 2020, so there's a deadline. But that doesn't mean that in a few months Mubadala will want to buy 50 million shares. They'd only want to do that if there was something they wanted to accomplish with that. Some example, might be if they needed more voting power on the board of directors, or if they wanted to turn around and sell off more shares without dropping below 10% ownership (currently at 10.8% ownership after the sale).

The other important thing is that last fact. The fact that Goldman Sach's views AMD stock as a worthwhile investment at this point in time. IE - they believe the value of AMD stock isn't going to stop growing.

Regards,
SB

 

https://meetwalter.com/

Walter is powered by AMD.

 

Quite possibly the best marketing move ever made by AMD, except for the length of the music loop, perhaps.

 

Today I learned future microcontrollers will be transparent.

 

AMD expands technology portfolio to drive immersive computing vision with acquisition of wireless virtual reality IP from Nitero
http://www.tweaktown.com/pressrelea....it&utm_medium=twitter&utm_campaign=tweaktown

 

If i had any money i would be buying AMD stock it seems sure that its gonna rise(if only i bough when it was 2 bucks....)

 

AMD reported a net loss of $73 million, or 8 cents a share, on sales of $984 million for the 1st quarter.
While this was reasonably in line with expectations, the company's shares tanked up to 19% in trading today on expectations of lower gross profit margins for the next quarter.
“It will take us a couple of quarters to transition the overall portfolio to Ryzen,” Chief Executive Lisa Su said, adding that 2017 would be dominated by lower-margin PC sales.
The company executive expressed hopes to improve profitability in 2018, forecasting a product mix that would include more server side sales.

 

Truth be told, AMD shares have been way overvalued for a long time now. This should be no secret. Shares could fall by 50% and they would still be overvalued.
Fact is the worldwide market is aching for AMD to get back in the race and beat some sense into Intel's stagnated monopoly.

 

Some important things to look at to give some relevance to the numbers.

http://ir.amd.com/phoenix.zhtml?c=74093&p=irol-newsArticle&ID=2268417

Compared to YoY numbers, revenues are up and losses are down for both GAAP and non-GAAP reporting numbers. Gross margins were up 2% YoY for both GAAP and non-GAAP. Overall revenue was up 18% YoY. Computing and graphics were up 23% YoY. Enterprise, embedded, and semi-custom was up 5% YoY (driven by increases in semi-custom).

GPU and CPU ASP were both up YoY, reflecting a more competitive position than a year ago.

Also, of interest to some, Vega is still on track for a Q2 launch. AMD's FY (ends on the last Sat. of Dec.) closely tracks the calendar year so this would mean they are still aiming to launch by the end of June. That doesn't say anything about product availability, however.

Considering that Ryzen's introduction was only recently, it's expected that it wasn't going to have a large impact. Overall, I view that as good news and that AMD are continuing to trend in a good direction.

And as ToTTenTranz mentioned, the share price has been greatly inflated by speculation and short term speculation based trading. IE - it hasn't been representative of long term value or long term valuation of AMD due to the highly speculative trading that's been going on by people that are looking to make a quick buck.

Regards,
SB

 

Poor Rys though. I just realized that if AMD gave him any stock options as a signing bonus, then all of those are now well under water.

 

Assuming AMD continues to execute, then the stock should go back up.

Much of the speculation was on not just Vega, but whether the Zen cores would power competitive CPUs. One part of that has turned out well, so assuming no manufacturing snags that will turn out well. We'll find out more about Vega in the next few months.

It's just that for the past year it's basically been day traders buying and selling stock in an attempt to maximize short term profit on speculation on future CPU/GPU tech. combined with how well Polaris was doing in the market. That makes for extreme stock volatility. I wouldn't be surprised to see a bit of a rebound as other speculators look at the drop as a good time to buy stock in AMD thus driving stock prices back up.

Regards,
SB

 

Stock prices are based on future earnings. AMD's stock price at $10.32 is still currently way overvalued.

Oppenheimer just upped earnings estimates for AMD's 2017 and 2018 fiscal years.

At $10.32 the PE (Price Earnings Ratio) is

1032 for $0.01 profit for 2017
69 for $0.15 profit for 2018

High PE for tech companies is 25-30 for fast growing companies that puts the AMD stock price at $4.50 for 2018.

For Intel the current PE is 16

https://finance.yahoo.com/quote/INTC/?p=INTC

It seems that investors in AMD forgot to do fundamental research and just bought AMD at too high price valuation because of the hype as if they were going to the casino and couldn't lose.

 

Or they realize that PE for near zero earnings isn't reliable. That's why Goldman and every other analyst and brokerage seems to have reached a different conclusion.

 

Do you have a recent link? Or are you refering to Goldman's insight a few months ago?
Below is today's Goldman's analyst statement.
http://www.cnbc.com/2017/05/02/gold...-plunge-sees-more-downside-for-chipmaker.html

 

Stock options at pretty much all companies have been replaced by RSUs, which don't go underwater like options do. So I expect Rys is fine.

 

From the link you posted:

That set the target to $10.60 from $11, which may or may not be lower than what Goldman spent with that $614m purchase a month or so ago. So they may have a sell rating while actively buying shares. I'd take it with a grain of salt. That's a debatable "overvalued" at ~3.6% difference. Far from the $4 predictions.

The entire market seems a bit overvalued, so there's that to consider as well, but current valuation, while speculative, doesn't seem that bad.

 

Target price is not the measure of what the price should be right now but a best guess for a window 12 month from now.
Goldman is actually on the lower end of the scale as the current consensus price is 13$.
That consensus price is remarkably optimistic considering AMD's execution history. To me that's mostly an indication that AMD has a relatively strong and convincing road map right now.
Also, analysts like this are speaking on behalf of the bank as a sell side operator. That really has very little to do with the bank's own book.
A grain of salt is always wise. But these guys actually have reputations to maintain, unlike the crazies who blog down at the likes of Seeking Alpha.

 

I think the grow of AMD will be slow but constant, they have a product base good enough to build over them and a leadership and seems to know what they are doing. The last Q will be the interesting one with Zen, Vega and Naples in the market.

 

Zen has already demonstrated good area efficiency, and good power efficiency at moderate frequencies. This bodes well for laptops and servers, which is where the real money is.

Vega remains an unknown quantity, but on paper it looks good.

 

We need Raven Ridge!