Advanced Micro Devices Posts Second Straight Revenue Increase

By Maria Armental 

Advanced Micro Devices Inc. on Thursday reported a second consecutive quarter of higher sales, fueled by customized chips for videogame makers and its latest graphics products.

Shares, up more than threefold over the past 12 months, fell 4% to $6.67, in afterhours trading on disappointing revenue projections for the current quarter.

But the chip maker, which had expected to post an operating profit in the second half of the year, saw its loss widen as it booked a $340 million charge tied to the most recent changes to its agreement with the company that makes most of its computer chips.

The second-largest supplier of personal computer chips after Intel Corp., AMD has reported four straight years of losses as PC sales fell to historic lows, driving down its revenue by more than $2 billion over that four-year period.

On Tuesday, Intel reported higher quarterly profit and said revenue for its client computing group -- composed largely of PC chips -- rose 4.5% from the year-earlier period.

Though PCs remain AMD's biggest business, the Silicon Valley company is trying to reduce its reliance on developing chips for videogames and semi-custom chips to order. Next year, AMD will start selling its x86 core "Zen" processors, which is expected to drive its re-entry into high-performance and server computing.

Over all, AMD's third-quarter loss more than doubled to $406 million, or 50 cents a share. 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.

Revenue rose 23% to $1.31 billion, well above the company's projection.

Analysts surveyed by Thomson Reuters had projected the company would break even on an adjusted basis on about $1.21 billion in revenue.

Gross margin narrowed to 4.5% from 31.1% in the previous quarter and 22.5% a year earlier.

For the current quarter, AMD expects revenue to decline 15% to 21% from the third quarter, which the company blamed on seasonally lower sales of semi-custom chips.

Analysts surveyed by Thomson Reuters had projected a 13% decline.

--Don Clark contributed to this article.

Write to Maria Armental at [e-mail]

(END) Dow Jones Newswires

October 20, 2016 17:34 ET (21:34 GMT)

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