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September 08, 2009
Advanced Micro Devices (AMD - US$ 4.53) 1-Overweight
Upgrade to 1-OW, Raise PT to $7
While comp pressures remain fierce & execution
risks continue, blv several factors may be
conspiring to allow weak investor sentiment
towards MPU & GPU challenger AMD to improve
over the nxt several months. We see an improved
overall PC market, a series of new product
launches, troughing margins, legal progress
w/Intel and potential progress at subsidiary Global
Foundries and potential for the first estimate
revisions in many qtrs positioning AMD to
outperform in coming months after a period of
significant underperformance. Ests move upwards
& we upgrade rating to 1-OW. Our PT moves to $7
or 1.4x CY10 sales. Sector view selective.
Blv trends in NB & server mkts may be seeing
upside vs street ests (see Asia Meetings note 9/8).
AMD strengthening product offerings across NB
(Tigris/ Congo), Servers (Istanbul), & Graphics
(DirectX11) should help support ASPs & margins.
Global Foundries making customer progress,
ATIC / Chartered a strong positive.
F3Q revs/EPS of $1.3B (+10% QoQ)/-$0.47 vs.
$1.2B/-$0.51 prior. CY09 rev/EPS of $5.1B/-$2.04.
Risks remain; Intel comp pressure, execution, &
United States of America
EPS (US$) (FY Dec)