Review of NASDAQ Listed Advanced Micro Devices, Inc & The Goodyear Tire & Rubber Company

Advanced Micro Devices, Inc.

Advanced Micro Devices, Inc. is a multinational semiconductor company that develops computer processors and related technologies for business and consumer markets. The company’s headline offerings are computer microprocessors, computer motherboard chipsets, embedded systems processors and graphics microprocessors for server applications, computer workstations, personal computers and embedded system applications. The company is the second-largest supplier of microprocessor and associated articles and is the only significant contender of Intel in the market for x86-based microprocessors. Some of the popular processors of the company are AMD K5, AMD K6, Athlon, Duron, Sempron, Athlon 64, Opteron, and the Phenom (processor).

The company was founded in 1969 as a Silicon Valley start-up, since then it has come a long way to be operating across the world. Its staff strength is around 10,000, and it is headquartered in Santa Clara in California.

The shares of the company are listed on the NASDAQ stock exchange in New York City, where they trade with the ticker name AMD. The shares of the company are also components of the NASDAQ 100 stock index and the S&P 500 stock Index.

Financial Update

The Company on 30 July 2019 came out with its 10 Q statement containing the second quarter results for the period ending on 29 June 2019.

  • The Net revenue of the company for the three months ended June 29, 2019, was $1.53 billion, a decrease of 13 per cent in comparison to the corresponding prior-year period. This decrease was primarily on account of a 13 per cent decrease in Computing and Graphics net revenue and a 12 per cent decrease in Enterprise, Embedded and Semi-Custom net revenue. The reduction in Computing and Graphics segment net revenue was on account of lower sales of Radeon™ channel products, and lower graphics channel memory sales caused on account of the fall in blockchain-related demand, having been partially counterbalanced by an increase in demand for the company’s Ryzen™ processors and data centre GPUs. The fall in Enterprise, Embedded and Semi-Custom segment net revenue were mainly on account of lower semi-custom revenue, having been partially counterbalanced by higher EPYC™ server processor sales.
  • The Gross margin of the company as a percentage of net revenue was 41 per cent for the three months ended June 29, 2019, compared to 37 per cent for the prior year corresponding three month period. This improvement in the gross margin was mainly on account of higher sales margins of Ryzen and EPYC processors, which have a higher gross margin than the corporate average.
  • The Company’s operating income for the three months ended June 29, 2019, was $59 million in comparison to operating income of $153 million for the prior year corresponding three month period. The Company’s net income for the three months ended June 29, 2019, was $35 million in comparison to the net income of $116 million for the corresponding three month period in the prior year.

Source – Company’s 10Q statement published on 30 July 2019.

Stock performance on the NASDAQ

Price Chart as on 02 October 2019, after the market close (Source: Thomson Reuters)

On 02 October 2019, at the time of writing the report (after the market close, ET 4.01 PM), AMD shares were on the NASDAQ were at US$28.31.

The stock has a 52-week high of US$ 35.55 and a 52-week low of US$ 16.03. The total market capitalisation of the company was US$ 31.18 billion.

Outlook

The company during the second quarter of 2019, has introduced a number of new products in the market. The company announced its 3rd Gen AMD Ryzen desktop processor based on its new “Zen 2” core architecture which comes with a chiplet design approach. The company also announced the availability of its AMD Ryzen 3000 Series of desktop processors with Radeon graphics. The company also introduced its 2nd Gen AMD Ryzen™ Pro mobile processors with Radeon™ Vega Graphics and AMD Athlon™ PRO mobile processors with Radeon Vega Graphics for commercial notebook users. Other than that the company also launched AMD Radeon RX 5700 XT and RX 5700 graphic cards based on its new AMD RDNA gaming architecture in 7 nanometers (nm) process technology to power the latest AAA and eSports PC games. The company added the AMD Ryzen Embedded R1000 System on a Chip (SoC) designed for applications such as digital displays, high performance edge computing and networking.

The management of the company is confident that it is on the right path to address the future requirements of the high computing marketplace.

The Goodyear Tire & Rubber Company

The Goodyear Tire & Rubber Company is a multinational tire manufacturing company. The company manufactures tires for automobiles, heavy commercial vehicles, light pick-up trucks, motorbikes, SUVs, racing cars, aeroplanes, farming equipment and heavy earth-moving equipment and machinery.

The company’s founder Charles Goodyear is credited of being the one to invent the modern-day tire that we know today, when in 1839 he accidentally discovered that the addition of heat and Sulphur alters the consistency of rubber which later on came to be known as the vulcanisation process, which is the basis of the tire manufacturing process. The company today is amongst the four largest tire manufacturing companies in the world with presence across America, Europe, Middle East, Asia and Australia.

The company’s shares are listed on the NASDAQ stock exchange in New York City, where they trade with the ticker name GT. The shares of the company also form components of the S&P 400 stock index.

Financial Update

The company on 26 July 2019 came out with its 10 Q statement containing the second quarter results for the period ending 30 June 2019.

  • The Net sales of the company in the second quarter of 2019 were $3,632 million, in comparison to $3,841 million during the corresponding second quarter period of 2018. The net sales of the company decreased during the second quarter of 2019 primarily on account of unfavorable foreign currency translation, mainly in the EMEA and American markets, with lower tire unit volumes, and lower sales in the other tire-related businesses, mainly on account of a decrease in the third-party sales of chemical products in American market. This reduction in volumes was partially counterbalanced by improvements in the price of products and product mix, especially in the EMEA and America markets.
  • During the second quarter of 2019, the company’s net income was $54 million, or $0.23 of revenue per share, in comparison to $157 million net revenue, or $0.65 of revenue per share, during the corresponding second quarter period of 2018. This decrease in the company’s net income was mainly on account of lower segment operating income.
  • On July 12, 2019, the Board of Directors of the company declared a cash dividend of $0.16 per share of the company’s common stock, which sums up to approximately $37 million.

Source – Company’s 10Q statement published on 26 July 2019.

Stock performance on the NASDAQ

Price Chart as on 02 October 2019, before the market close (Source: Thomson Reuters)

On 02 October 2019, at the time of writing the report (after the market close, ET 04.01 PM), GT shares on the NASDAQ were at US$13.82.

The stock has a 52-week high of US$ 23.95 and a 52-week low of US$ 10.74. The total market capitalisation of the company was US$ 3.21 billion.

Outlook

During the second quarter of 2019, the challenging general macro-economic in the world and its adverse impact on the tire industry continued, some of which include higher raw material procurement costs, a stronger United States dollar, lower OE industry volumes, depressed demand conditions in China, and volatile economic conditions in Latin America, with Brazil in particular.

During this second quarter of 2019, the results of the company reflect a 3.9 per cent decline in tire unit shipments compared to the corresponding second quarter period of 2018. During this second quarter period of 2019, the company realised approximately $59 million worth of cost savings, including raw material expenditure cost-saving measures of approximately $25 million, which was more than the impact of general inflation.

These challenging general macro-economic situations are expected to continue for some more time into the future. Hence the next financial period is expected to be challenging as well.