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Intel’s Next Threat: AMD Chinese Deal May Plunder Server Market

Advanced Micro Devices ( AMD ) is making a play for Intel ’s ( INTC ) Chinese server market — and maybe “Super 7” clients Alibaba ( BABA ), Baidu ( BIDU ) and Tencent ( TCEHY ) — as the No. 1 chipmaker prepares for 12,000 layoffs, MKM analyst Ian Ing suggested Friday. Late Thursday, during AMD’s Q1 earnings call, AMD CEO Lisa Su announced a $293 million joint venture with China’s Tianjin Haiguang Advanced Technology Investment to “help gain share in the fastest-growing region of the server market.” Su might as well have shouted a battle cry. This week, Intel announced a 12,000-layoff restructuring plan, cutting about 11% of its workforce, to “intensify” investments in the Internet of Things, memory and data centers. Intel’s Q1 data center sales rose 9% year over year, vs. 7% for the company overall. AMD’s Chinese joint venture is “(the) best challenge yet to Intel’s server dominance,” MKM analyst Ian Ing wrote in a research report. Last year, Chinese officials announced a plan to curb reliance on foreign chips. Partnering in China gives AMD “access to design and IP resources that are tailored to the China market and significant local field sales and support resources to help win designs at a wide range of customers,” Ing wrote. Intel’s turn from PC reliance — 55% of its total sales in Q1 — could further boost AMD, which might scoop some PC market share, Ing wrote as he upgraded AMD stock to buy from neutral but maintained his price target of 4. For Q1, a 13-week quarter, AMD reported $832 million in sales, down 19% year over year, and a per-share loss ex items of 12 cents vs. a 13-cent loss in the year-earlier quarter. Both metrics topped the consensus of 27 analysts polled by Thomson Reuters for $818.2 million and a 13-cent per-share loss. The consensus’ Q2 sales guidance, calling for a 15% sequential hike, implies $956 million, which would be up 2%. The consensus saw $889 million, Rosenblatt Securities analyst Kinngai Chan noted in a report. AMD stock jump 52% Friday, to 3.99, a 19-month high. Intel stock fell 1%; AMD’s graphics chips rival Nvidia ( NVDA ), a Tesla Motors ( TSLA ) partner, fell a fraction.

Alphabet Price Targets Cut After Q1 Miss, But Analysts Positive

Alphabet ( GOOGL ) shares sunk Friday, as the stock was handed at least seven price-target cuts after the world’s largest Internet company posted Q1 earnings and sales late Thursday that missed Wall Street’s expectations . Still, many analysts remained upbeat about the search leader’s prospects. Alphabet stock fell 5.4% on the stock market today , to 737.77 and falling just below the key 10-week line, testing a stock that broke out of cup-with-handle base at a 777.41 buy point last week. Shares are now down 5.4% from the buy point and near the recommended selling range of down 7% to 8%. But the stock has risen more than 30% over the last 12 months, helping Alphabet gain a spot on the IBD 50 list of leading growth stocks. Alphabet shares touched their all-time high of 810.35 on Feb. 2. IBD’s Take: How healthy is Alphabet’s stock and those its main rivals? Find out at IBD Stock Checkup Leading social network Facebook ( FB ), Alphabet’s top rival for digital advertising dollars, also saw its stock fall on Friday. Facebook stock fell 2.5% Friday, to 110.56. Facebook is set to report earnings on Wednesday after the close. Analysts saw the Q1 miss as a temporary stumble. “Looking past the headlines, we see several favorable trends,” Monness Crespi Hardt analyst James Cakmak said in a research report Friday. “First, the core operating margin is improving, expanding 140 basis points to 37.8%. “Second, although ‘other bets’ losses widened to $802 (million from $633 million), losses rose at significantly slower rates than revenue, thereby yielding more moderate growth in the net figure. Third, the primary growth driver for Google is mobile search. We cannot emphasize this enough, as what used to be a headwind for the company is now becoming a tailwind. Further to that, key assets like YouTube and programmatic (ad) efforts are on the upswing. And fourth, we are finally seeing the balance sheet put to work with $2.1 billion in repurchase.” With its earnings release, Alphabet said that during Q1 it spent $2.1 billion on share repurchases, and that it still has $1.4 billion in repurchase authorization, with no expiration date. Revenue was a “modest disappointment,” wrote Pacific Crest analyst Evan Wilson in a research note, but adding that “we believe that’s more than offset by a new passion for expense control. We remain excited about the combination of revenue growth, expense control and cash return and would be buyers of GOOGL.” He maintained his overweight rating on Google stock, with a price target of 910. Image provided by Shutterstock .

Facebook, LinkedIn, Twitter Earnings Put Light On Social Networks

Social networking, a top tech trend the past decade, will get the spotlight with earnings reports next week, starting with Twitter ( TWTR ) on Tuesday and followed by Facebook ( FB ) on Wednesday and LinkedIn ( LNKD ) on Thursday, all after the market close. Twitter reports during a tumultuous period for the company. Revenue growth has decelerated for the past six quarters as user growth has slowed for four consecutive quarters . The slowdown continues despite a series of new features Twitter has rolled out in the past year, including video tool Periscope and Moments. The company has overhauled management, starting with the return of co-founder Jack Dorsey as CEO in October. Dorsey is also the founder and CEO of payment processing firm Square ( SQ ), thus is juggling two heavy clubs. Since Twitter reported Q1 2015 earnings that revealed trouble ahead, the stock has plunged to 17 from 51. Twitter stock fell 1.6% in the stock market today , closing at 17.23. The consensus estimate of analysts polled by Thomson Reuters is for Twitter to report Q1 revenue of $607.8 million, up 39% year over year, with earnings per share minus items rising 43%, to 10 cents. Facebook Hopes To Keep Q4 Momentum Facebook Q1 earnings will come after the close Wednesday. The company soundly beat Q4 earnings expectations on booming mobile ad revenue, with the stock up 16% since then, though shares fell 2.5% Friday, to 110.56. Facebook CEO Mark Zuckerberg announced a 10-year strategy for Facebook at its annual F8 Developer Conference last week. He emphasized pushing its Messenger chat platform deeper into the business world with chatbots, enhancing Live video with virtual reality and expanding the social network to remote regions of the world. Analysts say the monetization strategy of Messenger will closely follow that of Instagram, with both platforms seen becoming multibillion-dollar businesses . The consensus on Facebook revenue is $5.25 billion, up 48%. Analysts expect EPS ex items of 62 cents, also up 48%. In what could be a long-term nightmare scenario for Facebook, users are feeling weary about posting personal reflections and updates on their daily lives. LinkedIn, the business networking site for professionals, saw its stock bomb 44% to a three-year low after the company posted Q4 earnings on Feb. 5, as its Q1 guidance widely missed estimates. LinkedIn acknowledged that a reshuffling of product strategy will impact short-term revenue growth in favor of the long term. LinkedIn stock has recovered about 10% since that 44% drop. It fell a fraction Friday, to 119.45. The consensus on revenue is $829.5 million, up 39%. EPS is figured at 60 cents, up 5%.