NEW YORK (TheStreet) -- Shares of Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report spiked 4.69% to $2.57 in early afternoon trading Monday on a report from Chinese site International Online that Chinese company BLX is pursuing an acquisition of the semiconductor company.
AMD reported break-even earnings for the fourth quarter last Wednesday, less than analysts' estimates of a penny a share. The chipmaker also posted earnings of $1.24 billion for the fourth quarter, a 22% year-over-year decline and in line with the consensus estimate.
PC CPU and GPU sales were down 25% year-over-year in the fourth quarter to $662 million with an operating loss of $56 million. Enterprise, embedded, and semi-custom sales dropped 17% to $577 million with an operating profit of $109 million.
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More than 17.8 million shares had changed hands as of 12:28 p.m., compared to the daily average volume of 14,526,900.
Separately, TheStreet Ratings team rates ADVANCED MICRO DEVICES as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate ADVANCED MICRO DEVICES (AMD) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally high debt management risk and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 509.0% when compared to the same quarter one year ago, falling from $89.00 million to -$364.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ADVANCED MICRO DEVICES's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ADVANCED MICRO DEVICES is currently lower than what is desirable, coming in at 32.61%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -29.37% is significantly below that of the industry average.
- The debt-to-equity ratio is very high at 11.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AMD's quick ratio is somewhat strong at 1.29, demonstrating the ability to handle short-term liquidity needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 491.66% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: AMD Ratings Report