Advanced Micro Devices Inc.'s second-quarter loss widened
sharply and revenue declined 35% from the year earlier as the chip
maker continued to struggle with a declining market for personal
computers.
For the current quarter, AMD projects revenue to increase
between 3% and 9% from the second quarter.
Sunnyvale, Calif.-based AMD is the longtime minority supplier of
microprocessors behind Intel Corp. The two companies use the same
fundamental design, known as x86, that powers nearly all PCs.
It has been trying to diversify its business, developing chips
for gaming systems, for example. But PC chips remain its main
business, even as its market share has fallen dramatically.
Further, five of its customers collectively accounted for about 61%
of its net revenue in 2014, with Hewlett-Packard Co., Microsoft
Corp. and Sony Corp. each accounting for more than 13% of
consolidated net revenue, according to a regulatory filing.
Shares, which on Thursday set a near 3-year-low trading at
$1.87, rose 3.2% to $1.93 in late trading. On July 16, 2014, AMD's
shares set a 52-week-high trading at $4.77.
The slowdown of the personal computer market has battered the
semiconductor sector. On Wednesday, Intel reported a 3.2% drop in
second-quarter profit on revenue that fell 4.6% from the year-ago
period.
Chief Executive Lisa Su told Wall Street analysts in May she
expected the money-losing semiconductor to return to profitability
in the second half of the year. Ms. Su set a long-term annual
earnings target for the company of 50 cents a share. In 2014, AMD
reported a loss of $403 million, or 53 cents a share, on revenue of
$5.5 billion.
Overall, AMD reported a net loss of $181 million, or 23 cents a
share, compared with a loss of $36 million, or five cents a share,
a year earlier. Excluding a technology transition charge and
stock-based compensation, AMD reported a loss of 17 cents, compared
with a year-earlier profit of five cents a share.
Revenue fell to $942 million, from $1.44 billion a year
earlier.
AMD, which initially projected a 3% decline compared with
second-quarter revenue, revised its figures after the quarter ended
to the 8% it reported Thursday and said it would log a $33 million
charge tied to its manufacturing transition, further squeezing
profit margin.
Analysts surveyed by Thomson Reuters had projected a loss of 17
cents a share on $950.5 million in revenue, a 7.7% decline from the
previous quarter.
Gross margin narrowed seven percentage points from the second
quarter to 25%.
Revenue in its computer and graphics segment fell by 54% from
the year-ago period.
Total debt was unchanged at the end of the quarter at $2.27
billion.
Write to Maria Armental at maria.armental@wsj.com and Don Clark
at don.clark@wsj.com
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