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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.

Amazon.com Shutters Flash-Sale Fashion Site MyHabit

E-commerce leader  Amazon.com ( AMZN ) is shutting down fashion flash sale e-tail website Myhabit.com, first reported by  Women’s Wear Daily  and confirmed by Amazon. The website’s employees were told Thursday morning that the site would shut down at the end of May, WWD reported. In a statement, Amazon said, “Fashion is one of Amazon’s fastest-growing categories. As we continue to increase our breadth of selection and improve the customer experience on Amazon.com, we have decided to simplify our offering and will be closing MyHabit at the end of May. “Our customers can now shop from Amazon Fashion’s incredible assortment of brands across clothing, shoes and accessories — backed by award-winning service, free shipping and returns, and exclusive benefits for Prime members.” Analysts have told IBD that apparel has not been a strong category that Amazon. Alibaba ( BABA )-backed Shoprunner — an e-tail site — has told IBD that one of the ways to compete with Amazon.com’s market dominance is to find categories where the firm is not strong. In-season, branded apparel is one such category, Shoprunner spokespersons said. Amazon.com stock fell a fraction Thursday, to 631. The company has a good IBD Composite Rating of 85, where 99 is the highest. The IBD Leaderboard stock is 4.6% extended, and thus at the high end of the buy range, from a cup-with-handle breakout at a 603.34 buy point, and is near a secondary buy point, at 638.16.

Baidu Reportedly Pulling A Google, Spinning Off Video Service

Baidu ( BIDU ) will reportedly spin off its professional Baidu Video service, as the China Internet search leader looks to pare is newer, money-losing businesses from its core search operation. Baidu Video would receive RMB 1 billion ($154.3 million) in new investment as it takes on two more partners, according to a report Thursday from Young’s China Business blog . Rumors about changes at Baidu Video come soon after reports  of a major corporate reorganization at Baidu that aims to separate its older, profitable search services from its newer businesses, many of which are losing money. This is similar to what Google did in creating Alphabet ( GOOGL ) as the parent company for all its operations. Like Alphabet, Baidu is investing to develop self-driving cars and other technology not related to its core search operations. In November, Baidu announced it had submitted an application for a direct-banking license in partnership with China’s Citic Bank and for an online insurance license in partnership with Allianz ( AZSEY ) and Hillhouse Capital. To continue its growth, Baidu should follow in Google’s footsteps “and split its non-core businesses from its core search and ads business. If they do this, Baidu stock would likely receive a big boost, leaving them with the cash to make a foray into the U.S. market,” Taiwan-based Sephi Shapira, CEO of mobile advertising platform MassiveImpact, told IBD via email in February. Baidu Could Be Eyeing Big Structural Changes Young’s China Business said the Baidu Video unit is separate from Baidu’s iQiyi.com, the online video service that is similar to Google’s YouTube. Baidu announced in February that it would sell money-losing iQiyi to an outside group led by Baidu CEO Robin Li. IQiyi is looking to become a bigger force in the country’s video-streaming and movie-making fields, a nearly $6 billion market that also includes Baidu rivals Alibaba Group ( BABA ), Sohu.com ( SOHU ) and Tencent Holdings ( TCEHY ). Last year, Netflix ( NFLX ) said it wants to begin operating in China, but the streaming media company has expressed uncertainty about its planned move into the country by 2016. Baidu plans several changes to its business structure, including establishment of a subsidiary that will house its online search services, said Marbridge Consulting, citing a release via Baidu’s official account on Tencent’s   WeChat mobile messaging platform. According to Marbridge , the spinoff will see New Culture Media Group and venture capital firm SAIF each invest about RMB 500 million ($77.1 million) in Baidu Video. Each of the new partners would receive about 20% of Baidu Video, Marbridge said. Baidu stock has nearly doubled since skidding to a three-year low of 100 in early February. Baidu stock broke out of a cup-with-handle base in late March, at a 189.90 buy point. Shares were flat in midday trading in the stock market today , near 194. Baidu will report Q1 earnings on April 28 and has given revenue guidance below analyst expectations, as the company invests heavily in its “O2O” (online-to-offline) strategy to draw Web shoppers to in-person services and physical stores. Baidu recently  said it is seeking  a $1 billion loan. A Baidu spokeswoman said the company aims to borrow the funds through a five-year syndicated facility for general corporate purposes, according to the Bloomberg report. Image provided by Shutterstock .