AMD Posts Increase in Sales, But Guides Lower on Revenue -- WSJ
October 21 2016 - 3:03AM
Dow Jones News
By Maria Armental and Don Clark
Advanced Micro Devices Inc. on Thursday reported a second
consecutive quarter of higher sales, fueled by customized
processors for videogame makers and demand for its latest graphics
chips.
But the company saw its loss widen as it booked a $340 million
charge tied to the most recent changes to its agreement with the
company that manufactures most of the chips it designs. AMD also
issued revenue guidance for the current quarter that was lower than
analysts expected.
AMD's shares, which have more than tripled over the past 12
months, fell 6.5% to in after-hours trading.
The second-largest supplier of personal-computer processors
after Intel Corp., AMD has reported four straight years of losses.
AMD has struggled to gain market share against its larger
competitor, while both companies have suffered from slowing PC
sales. It has also been losing sales to Nvidia Corp., the other
major supplier of graphics chips.
In one response, AMD has stepped up its efforts to supply chips
used in gaming consoles sold by Sony Corp. and Microsoft Corp. That
strategy paid off in the latest quarter; AMD said revenue in the
unit that includes those chips rose 31%.
Meanwhile, the PC market has been improving slightly, while
gamers have shown a willingness to pay for high-end graphics chips.
AMD said its computing and graphics segment revenue rose 11% from
the year earlier period.
The company hopes the business will grow faster based on a new
processor design called Zen, which is expected to be available for
PCs in the first quarter of 2017 and for servers in the second
quarter.
Lisa Su, AMD's chief executive, said sample Zen chips have been
greeted enthusiastically in both markets. "We have multiple
customers on both the PC side as well as the server side," she said
during a conference call with analysts.
Over all, AMD's third-quarter loss more than doubled to $406
million, or 50 cents a share. Revenue rose 23% to $1.31 billion,
well above the company's projection. Excluding the charges tied to
the changes to the Globalfoundries agreement and other items, AMD
reported a profit of 3 cents a share, compared with a loss of 17
cents a year earlier.
Analysts surveyed by Thomson Reuters had projected the company
would break even that basis on about $1.21 billion in revenue.
AMD's sales of custom chips are usually highest in the third
quarter, as videogame console makers build systems ahead of the
holiday season. Consequently, Ms. Su said, AMD expects revenue in
the current to decline 15% to 21% from the third quarter. Analysts
surveyed by Thomson Reuters had projected a 13% decline.
Write to Maria Armental at maria.armental@wsj.com and Don Clark
at don.clark@wsj.com
(END) Dow Jones Newswires
October 21, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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