Why Advanced Micro Devices, Inc. Stock Plunged?

Why Advanced Micro Devices, Inc. Stock Plunged?
By Advanced Micro Devices, Inc. (amd.com) [Public domain], via Wikimedia Commons

Just days before the latest quarterly earnings report, more than 2.6 million shares in Advanced Micro Devices, Inc. (NYSE:AMD) changed hands after-hours. Shares had closed up 0.7% at $2.74 on the regular session. Some investors took to Twitter to speculate on the explanation for the drop, which included a share dump or people being blown out of their positions.


Last week, Advanced Micro Devices announced that Dr. Lisa Su would be taking over from Rory Read as CEO of the company. Shares tumbled on that news, with various analysts weighing in with their opinions.
Patrick Moorhead, founder and principal analyst for Moor Insights & Strategy, claimst that Su is “incredibly smart” and said:
“Lisa Su is respected inside and outside the company and, quite frankly, has more of what people expect when they imagine a semiconductor CEO [than Read]… AMD can survive. The only questions I am getting are on its ability to thrive and become a high-growth tech company again. That will be on Lisa Su’s back.”

The general consensus is that the replacement of Read with Su is not a surprise, but the timing is strange, coming as it does just days before an earnings report.

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Advanced Micro Devices’ Earnings

Last quarter the company reported $0.02 EPS for the quarter, hitting the Thomson Reuters consensus estimate of $0.02. Company revenue was $1.44 billion for the quarter, meeting the consensus estimate of $1.44 billion. During the same quarter in the previous year, the company posted ($0.09) earnings per share. The company’s quarterly revenue was increased 24.1% on a year-over-year basis.

On average, analysts predict that Advanced Micro Devices will post $0.12 earnings per share for the current fiscal year. This quarter the forecast calls for $0.04 EPS and $1.47 billion in revenue, which is almost the same as one year ago. However on this occasion there are fears that results may be overshadowed by speculation as to what the sudden and unexpected change of CEO means.


While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala.
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