AES Corp
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Company profile

The AES Corporation is a holding company. The Company, through its subsidiaries and affiliates, operates a diversified portfolio of electricity generation and distribution businesses. It is organized into six strategic business units (SBUs): the United States; Andes; Brazil; Mexico, Central America and the Caribbean (MCAC); Europe, and Asia. As of December 31, 2016, its United States SBU had 18 generation facilities and two integrated utilities in the United States. As of December 31, 2016, its Andes SBU had generation facilities in three countries. Its Brazil SBU has generation and distribution businesses, Eletropaulo and Tiete. As of December 31, 2016, its MCAC SBU had a portfolio of distribution businesses and generation facilities, including renewable energy, in five countries. As of December 31, 2016, its Europe SBU had generation facilities in five countries. As of December 31, 2016, its Asia SBU had generation facilities in three countries.

Closing Price
$18.29
Day's Change
0.00 (0.00%)
Bid
--
Ask
--
B/A Size
--
Day's High
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Day's Low
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Volume
(Light)
Volume:
0

10-day average volume:
4,066,235
0

UPDATE: AMD stock slides as forecast, data-center segment come in lower than expected

7:11 am ET January 29, 2020 (MarketWatch)
Print

By Wallace Witkowski, MarketWatch

Segment that includes server sales disappoints in both sales and outlook, but execs and analyst blame gaming consoles instead of data-center business

Advanced Micro Devices Inc. failed to live up to Wall Street's high expectations Tuesday, damaging its high-flying stock.

AMD (AMD) shares declined 4% in after-hours trading Tuesday and were down the same amount premarket Wednesday, after disclosing a lower-than-expected forecast with its fourth-quarter earnings report. The company said it expects revenue of $1.75 billion to $1.85 billion for the first quarter -- analysts surveyed by FactSet had forecast revenue of $1.86 billion -- and revenue growth of about 28% to 30% for the full year, roughly in line with analyst estimates.

The company's results topped Wall Street estimates, with fourth-quarter revenue of $2.13 billion rising from $1.42 billion in the year-ago period and topping the average analyst outlook of $2.11 billion, but sales in the segment containing data-center and gaming-console chips fell short of what analysts were expecting.

AMD's data-center sales are an important business for investors betting on big growth -- AMD stock was the biggest gainer on the S&P 500 index (http://www.marketwatch.com/story/for-chip-companies-stocks-soared-as-sales-slumped-in-2019-what-does-that-mean-for-2020-2019-12-31) in both 2018 and 2019. AMD's attempt to get back into the server business involves challenging longtime rival Intel Corp. (INTC) , which reported better-than-expected data-center sales (http://www.marketwatch.com/story/intel-stock-rallies-as-data-center-sales-drive-big-wall-street-beat-2020-01-23)last week.

AMD reported sales of $465 million from its enterprise embedded and semi-custom segment, which includes the company's Epyc line of data-center chips, while analysts had expected sales to rise 39% to $603.8 million. AMD did not specifically quantify how much data-center sales versus gaming-console sales figured into the numbers.

Weakness in the revenue outlook going forward is linked to gaming-console chip sales, which have been soft ahead of console makers Sony Corp. (6758.TO) and Microsoft Corp. (MSFT) rolling out new PlayStations and Xboxes later in the year. AMD said in a statement that the sequential decline in revenue going into the first quarter "is driven primarily by negligible semi-custom revenue which continues to soften in advance of the ramp of next-generation products, in addition to seasonality."

"Game-console sales dropped like a rock and had nothing to do with Epyc," Patrick Moorhead, principal analyst at Moor Insights & Strategy, told MarketWatch. Moorhead, a former AMD executive, pointed out AMD's "strong Epyc" sales, and said he believes they more than doubled over the year-ago period.

"Unfortunately, the numbers are combined," which means that any server growth could be cloaked by weakness in the console sales, he said.

Read:Chip stocks catch brunt of tech decline, but coronavirus could benefit U.S. memory makers (http://www.marketwatch.com/story/chip-stocks-catch-brunt-of-tech-decline-but-coronavirus-could-benefit-us-memory-makers-2020-01-27)

On the conference call, AMD President and Chief Executive Lisa Su said data-center sales accounted for a "mid-teens" percentage of revenue for the quarter, adding that "we are very focused on continuing to grow share the data-center market, and we feel good about our midyear market share targets."

"From our standpoint, we see it as a good market environment for data center in both cloud as well as enterprise," Su said. "When we look at our full-year revenue guide of approximately 28% to 30% for the year, the highest growth from percentage standpoint will obviously be servers."

In AMD's largest segment, computing and graphics chips, the company reported sales of $1.66 billion, while analysts expected a 52% rise in sales to $1.5 billion, according to FactSet.

The company reported fourth-quarter net income of $170 million, or 15 cents a share, compared with $38 million, or 4 cents a share, in the year-ago period. Adjusted earnings were 32 cents a share, while analysts had forecast earnings of 31 cents a share.

Read:For chip companies, stocks soared as sales slumped in 2019 -- what does that mean for 2020? (http://www.marketwatch.com/story/for-chip-companies-stocks-soared-as-sales-slumped-in-2019-what-does-that-mean-for-2020-2019-12-31)

For the year, AMD reported net income of $341 million, or 30 cents a share, compared with $337 million, or 32 cents a share, in the prior year. Adjusted earnings were 64 cents a share, while analysts had forecast earnings of 62 cents a share. Annual revenue rose to $6.73 billion, compared with the Street's forecast of $6.71 billion, up from $6.48 billion in 2018.

Over the past 12 months, AMD shares have rallied 149%. In comparison, the S&P 500 index has gained 24%, the tech-heavy Nasdaq Composite Index has grown 31% and the PHLX Semiconductor Index has increased 51%.

Of the 38 analysts who cover AMD, 15 have buy or overweight ratings, 20 have hold ratings and three have sell or underweight ratings, with an average price target of $43.30.

-Wallace Witkowski; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires

January 29, 2020 07:11 ET (12:11 GMT)

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