Advanced Micro Devices Inc. swung to a profit in the fourth
quarter but projected a decline in revenue for the current period,
sending shares down nearly 10% in after-hours trading.
For the first quarter, AMD said it expects revenue to be about
16% less than the period ended in December, plus or minus
3%--steeper than the usual seasonal decline for the industry and a
worse drop than analysts expected.
AMD has been trying to restructure its operations to diversify
its products and adapt to progressively weak demand for PCs, which
also has weighed on its peers.
The Sunnyvale, Calif., company's fourth-quarter results were
buoyed by sales of chips for the new videogame consoles introduced
in November by Sony Corp. and Microsoft Corp. AMD customizes parts
of its products for each company, creating what it calls
"semi-custom" computers on a chip, or SoCs.
"Combined, Sony and Microsoft reported selling more than seven
million units in less than two months," said Rory Read, AMD's chief
executive, during a conference call with analysts. "This is more
than double the number of prior generation consoles sold in their
first quarter of introduction."
AMD said it expects first-quarter revenue for the console chips
to fall back from the fourth-quarter peak. But Mr. Read said he
expects the overall momentum of that business to continue "as we
increase game console SoC shipments for the year and pursue new
wins from our semi-custom design pipeline."
For the quarter ended Dec. 28, AMD reported a profit of $89
million, or 12 cents a share, compared with a year-earlier loss of
$473 million, or 63 cents a share. Excluding restructuring and
other charges and amortization, the company reported a per-share
profit of six cents, compared with a loss of 14 cents a share a
year earlier. Analysts were expecting a per-share profit of five
cents.
Sales jumped 38% to $1.59 billion, topping the company's October
projection for about $1.53 billion, which was slightly more than
market expectations at the time.
Gross margin, an important metric in the semiconductor sector,
widened to 34.8% from 15.4%.
Revenue at the company's computing solutions business, which
supplies chips to desktop and laptop PCs, fell 13%.
The company's projection for the first quarter indicates a
revenue range of $1.29 billion to $1.38 billion. Analysts polled by
Thomson Reuters were expecting revenue of $1.36 billion, above the
$1.33 billion midpoint of AMD's outlook.
After the company's announcement, AMD's shares were trading at
$3.76, off 41 cents, in after-hours trading. Through 4 p.m.
Tuesday, the stock has risen 70% in the last 12 months.
Write to Anna Prior at anna.prior@wsj.com and Don Clark at
don.clark@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires