Advanced Micro Devices
For the fourth quarter, AMD saw a 45% rise in net sales, coming in at $1.84 billion. Operating income jumped an astonishing 930% to $206 million. Net income from a GAAP perspective was $96 million, or $0.21 per diluted share, which represented a nice reverse of the year-ago loss of $30 million, or $0.08 per diluted share.
There was a non-cash charge, which affected the net earnings picture for the quarter relating to the Spansion IPO, a joint venture with Fujitsu involving flash memory. Backing out this one-time charge, fourth-quarter net income came in at $205 million, or $0.45 per share. The results so far are impressive, but let's move on to the full-year report.
For all of 2005, AMD saw net sales rise 17% to $5.8 billion. Operating income increased 4% to $231.6 million, and net income appreciated by more than 80% to $165.5 million, or $0.40 per diluted share. AMD posted a solid year, especially from a top-line perspective. The cool thing about this coming year is that Motley Fool Inside Value pick Microsoft
But would I necessarily buy AMD at this price level? No. According to the key stats, AMD has a trailing P/E right over 90 using 2005 GAAP earnings in the denominator. Even after generously using the company's pro forma earnings, the trailing P/E is a lofty 55. High P/E ratios aren't always bad, but with most analysts projecting about 15% growth per annum, they do seem a bit rich.
If you want exposure to this company as a play on the chip sector, I'd wait for a pullback, because AMD is already up by more than 10% as of this writing on Thursday. AMD is certainly doing well, but it's always Foolish to be cognizant of getting in at a good price.
For more micro-Foolishness:
- IBM's Profits Jump: Fool by Numbers
- Intel Irritates Investors: Fool by Numbers
- Intel: Of Marketing and Value
- Spansion's Expanding Losses