Focus: AMD
>> we’ve got the latest earnings from a.m.d. joining us with reaction is eric ross of thinkequity partners with me on set today. just to recap for our viewers, first-quarter e.p.s. for advanced micro devices, 38 cents a share. you were looking for 27 cents and consensus was 30 cents. revenue matched and the second-quarter sales outlook unchanged to slightly lower.
>> the revenue came in exactly where we thought it was going to be, a little bit lower than what the fourth quarter was. that’s right in line with expectations. the guidance was in line with what we were expecting, a little bit lower, flat to slightly down seasonally so that’s a little biv a disappointment. the e.p.s. number looks impressive but i haven’t looked to see what comprises the e.p.s. number, is it a tax rate, a one-time charge. it’s hard for me to tell.
>> we have a halt on the stock in the extended session. how would you expect it to hope?
>> i expect it to open up. it usually takes the conference call and the analysts to analyze the e.p.s. number before you have real combs coming―coming out in the next day.
>> you have a sell rating on a.m.d. anything that would encourage you to change that?
>> i think that a.m.d.’s growth rate has really been halted. we’re looking at the growth rate halted in the second quarter, as well. we know that intel’s pricing is very aggressive and a.m.d. will have to respond to this and we think that will hit both revenues and margins in the near future.
>> the story continues to be the market share war with intel.
>> definitely.
>> you seem to think that intel might have the upper hand?
>> i think intel has lost a lot of share and is feeling desperate. i think intel’s results are going to be very bad when they come out next week and in order to combat that, intel is doing the only thing they can do, fight on pricing and manufacturing and that’s the problem for a.m.d.
>> will this curb the market share a.m.d. has been able to gain on intel thus far?
>> it will slow the gains that a.m.d. has been able to gain thus far, slow the growth of a.m.d. and might flatten it out. we’ve been hearing in the channel that intel is winning back business on the margin.
>> why is that for intel?
>> because of pricing. they’re lowering the price low enough.
>> that’s enough? it doesn’t have to do with the product?
>> it does but at some point technology loses to price.
>> a.m.d. shares ahead of the announcement were up considerably today. though you do think that the stock is overvalued?
>> i think so.
>> how much?
>> we have a price target of $30 so we think it could pull back from here to $30. i don’t think―again, the e.p.s. number sounds impressive, haven’t had time to go through it but i think when we come through the conference call, the cautious tone of company management might give us a sense of what they’re really going through as far as gaining share.
>> eric, you’re saying that a.m.d. shares would have to lose over $5 from where they are right now before you would be a buyer?
>> probably, something around there, yes.
>> we have a couple of minutes, here―a couple seconds. what does a.m.d. have to do to impress you?
>> obviously, again, going through the e.p.s. number, that would be very impressive if that was the real number and i’m very happy if that’s the real number but i need to see revenue growth.
>> eric ross, so appreciate your insight. eric is with thinkequity partners.
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Listen Focus: Money & Politics
>> the u.s. attorney in new york, the f.b.i. and the securities and exchange commission today announcing charges in insider trading ring that netted nearly $7 million. the authorities charge two young associates, one from goldman sachs, the other from merrill lynch, and a printer from wisconsin in the scheme. in addition to the defendants, the s.e.c. also filed civil charges against eight people who traded based on the insider tips. allan dodds frank was at the press conference in new york and joins us with more details.
>> peter, the authorities called this insider trading scheme the most widescream, premeditated insider trading plot in recent memory. u.s. attorney michael garcia said the conspirators had two different plots in motion at the same time and spread the tips around to others.
>> what the defendants tried to do was to turn their inside sources of information into an insider trading business. the develops developed their sources of information in the hopes of running that insider trading business as a money-making machine and for a little while it worked, netting millions of dollars.
>> authorities believe they have a clear picture of what happened, since a former goldman sachs associate, 29-year-old david patchen, has been charged earlier and is cooperating. according to the complaint in october 2004, patchen and a 26-year-old howard plotkin, harvard graduate and goldman associate in fixed income research, began trading on inside information. they learned about six pending takeover deals from stanis love spiegelman, an associate in mergers and acquisitions. today, they made $6.4 million with their biggest score coming from trading on insider information that reebok would be bought by adidas last august.
>> the process of trying to find other individuals at prominent investment banks who would be willing to provide similar tips in return for a share of trading profits. they even can’t contemplated using exotic dancers to obtain confidential information from investment banker clientele.
>> in the second scheme, prosecutors say the conspirators took out newspaper ads to recruit printers who could get hired at a wisconsin printing plant where “business week” is printed. 20-year-old printer is charged with stealing advanced copies of ,” week” so the others could buy stocks mentioned favorably in the column culled “inside wall street.”
>> thank you. one other legal story to tell you about today,, a new jersey jury ordering merck to pay $9 million in punitive damages to a man who blamed vioxx fors it maker. the judge early―the jury earlier awarded $4.5 million in compensatory damages. merck says it will appeal the verdict. it’s facing 10,000 lawsuits over vioxx and that is its second loss. the company set aside nearly $1 billion for legal costs and says it will continue fighting each case. the new jersey-based company withdrew vioxx from the market in 2004 when a study showed it doubled heart attack risk after 18 months of use. coming up, a powerful u.s. senator faces off with the navy about shipyard repairs along the gulf coast and a key republican calls for a pullout from iraq. that, and more, ahead on “money & politics.”
