AMD's Earnings Beat the Street, Stock Drops Anyway
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Advanced Micro Devices (AMD
) surprised the Street by topping expectations
when it announced its fourth-quarter earnings Thursday afternoon. During the quarter, the semiconductor firm earned $1.18 billion, or $1.52 per share. A year earlier, AMD lost $1.44 billion, or $2.36 per share. Adjusted earnings dipped into negative territory, as AMD lost 8 cents per share -- but that was still better than the expected loss of 17 cents per share. Revenue checked in at $1.65 billion, handily topping expectations of $1.49 billion.AMD attributed the earnings surprise to "net favorable impacts" from its legal settlement with its rival, Intel (INTC
), which paid it $1.25 billion as part of an agreement to settle legal disputes between the two. "AMD's quarter marks another milestone in our transformation and underscores our growing momentum," said AMD President and CEO Dirk Meyer in a statement.
Despite the solid performance and numbers that some analysts are describing as "good across the board," the stock was lower in pre-market trading. It seems as though analysts and investors are focusing on AMD's assertion that the first quarter of 2010 will see revenue that will be "down seasonally." This comment led to a downgrade from Auriga, which lowered AMD to sell from hold with a price target of $6. In my earnings preview for AMD
, I noted that the stock faces a fair level of resistance, and this report is not going to help matters. Thursday's positive numbers could have been good enough to send the stock through the overhead resistance -- but it seems as if investors just aren't in the mood for good news right now.