Salomon Smith Barney cut Advanced Micro (AMD ) to neutral from outperform, and trimmed the $17 target to $10.
Analyst Jon Joseph says he was looking for second quarter sales of $840 million vs. guidance of $620 million to 700 million. Given Intel's second quarter shortfall, and the news of excess AMD inventory in channel, Joseph says the miss is not a complete surprise.
While he expected a weaker PC component market in the second quarter, he thinks AMD has company-specific issues: loss of market share to Intel; a lack of speed upgrades; and pricing pressure. He figures units should now fall about 18% quarter over quarter with pricing down 23% to $66 instead of flat. He widened his $0.30 2002 loss estimate to a $0.85 loss; and cut the $0.50 2003 earnings per share estimateto breakeven, as well as trimmed the $1.50 2004 earnings per share estimate to $0.60 EPS.