Advanced Micro Devices, Inc. (AMD) Losses In Line With Estimates, Sales Miss

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Advanced Micro Devices released the earnings results from its second fiscal quarter after closing bell tonight, posting non-GAAP losses of 17 cents per share and revenue of $942 million, a 35% decline year over year and 8% sequentially. Analysts had been looking for losses of 17 cents per share and revenue of $950.5 million. In the same quarter last year, the company posted earnings of 5 cents per share on $1.44 billion in revenue.

Key metrics from AMD’s earnings report

Operating losses were $137 million, while net losses were 23 cents per share or $181 million, compared to losses of 5 cents per share or $36 million in last year’s second quarter. AMD management said PC demand was weaker than expected, which impacted their APU sales to OEMs. They also reported falling sales in graphics and client product lines.

Gross margin fell 7% percentage points quarter over quarter to 25%, which management said was due to a greater mix of sales from its Enterprise, Embedded and Semi-Custom segments. Also volumes of Computing and Graphics APUs were lower than expected, and AMD took a $33 million charge related to the transition from 20 nanometer technology to finFET. Excluding that charge, gross margin was 28%.

AMD President and CEO Dr. Lisa Su said in a statement:

“Strong sequential revenue growth in our EESC segment and channel business was not enough to offset near-term challenges in our PC processor business due to lower than expected consumer demand that impacted sales to OEMs. We continue to execute our long-term strategy while we navigate the current market environment.”

AMD’s earnings by segment

Computing and Graphics revenue declined 54% year over year, with operating losses for the segment at $147 million. Revenue from AMD’s Enterprise, Embedded, and Semi-Custom segment saw an 8% year over year decline  as a result of lower server sales and non-recurring engineering revenue. Operating income for the segment fell to $27 million from last year’s $97 million.

Operating losses in the other category were $17 million, compared to last year’s losses of $28 million. The decline was mostly the result of lower stock-based compensation and no amortization on acquired intangible assets.

For the third quarter, AMD expects a 6%, +/- 3%, increase in revenue.

As of this writing, shares of AMD were up 2.3% at $1.91 per share.


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