While debt levels are down at Advanced Micro Devices, and free cash flow has improved as capital spending slows, Gimme Credit downgraded AMD’s corporate bond score from improving to stable.
Shares of Advanced Micro Devices (AMD) were flat Wednesday, trading at around $5.76.
It’s not that things are getting worse so much as they won’t be improving. AMD debt has been whittled substantially since its 2009 spinoff of Global Foundries, its chip manufacturing operation.� Dave Novosel, a senior analyst at Gimme Credit, tells Barrons.com that with a reorganization in later stages, “going forward we are not going to see the same kind of improvement.”
In an interview with Barrons.com, Novosel said:
“Margins may improve for AMD but it is going to be slight. Because they are moving to newer technologies — the 32 nanometer chip, and they are going to 28-nanometer chip technology shortly — those should improve margins, because costs are lower and prices are likely to stay the same. But they have not proved they can deliver these chips seamlessly. They have had some execution issues. And going back several years, there have been enough glitches with new products that the margins have not improved to the extent they were expected to by management.”
Gimme Credit has three scores: improving, stable and declining.
Editors Note: This post has been updated to reflect that Gimme Credit issues scores, not ratings.
No comments:
Post a Comment