(AMD story updated with share price changes and analyst commentary)
NEW YORK ( TheStreet) -- Advanced Micro Devices (AMD) (AMD) stock has been falling after the company reported a rise in third-quarter earnings as initial excitement over it waned, the broader market appeared flat and other semiconductors only ticked moderately higher or lower in afternoon trading.
Shares of AMD fell 0.5% to $7.11 in afternoon trading while rival Intel (INTC) fell 0.4% to $19.24. Earlier, AMD shares had been trading higher in the Friday pre-market session and Thursday after-market session following the release of the report -- and as investors got excited about the possibility that semiconductor hardships had bottomed out and gotten pass a rough patch in the business cycle.
While many nodded at the company's solid third-quarter gross margin and lower operating expenses (despite the weak computing environment in the third quarter) and found solace in the company's ability to maintain profitablity through finance, manufacturing and operational restructuring -- a closer look at the reports generated concerns.
Such concerns included the company's flat fourth-quarter guidance, its weaker performance than Intel for the same quarter, its ability to follow through on new product execution, and its lag in technology next to Intel. Following the earnings report, Morgan Stanley analyst Mark Lipacis told clients in a note that "we have multiple concerns -- fourth-quarter guidance for flat quarter-on-quarter revenues was about 3 points below Intel's, AMD appears to have lost share in server again, GPU revenues declined by 11% quarter-on-quarter and the company expects the inventory correction to extend into the fourth quarter.""We remain concerned about AMD's 80%-plus revenue exposure to" the consumer PC market, "and execution risks related to its Fusion products," he added. Meanwhile, Goldman Sachs analyst James Covello said, in a client note, that he expects AMD to continue to encounter challenges with its outsourced model because of the complexities of having separate design and manufacturing teams. "This has been evident in the 32nm transition delay." Stifel Nicolaus analyst Kevin Cassidy said in a client note that AMD did well in the third quarter taking into account a sudden decline in demand and new product launches by rivals. "Returning an operating profit under these conditions is laudable."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV