By Benjamin Pimentel
Advanced Micro Devices Inc. (AMD) is expected to report a bigger
loss and lower sales in the first quarter as the chip maker
struggles with the downturn and its own bid to set a new course as
a leaner player in the microprocessor market.
AMD is scheduled to report results on April 21.
The company will report financials shortly after arch-rival
Intel Corp. (INTC) boldly declared a bottom for the
personal-computer market, although many analysts were disappointed
that the chip giant again did not issue a formal outlook.
Still, Wall Street will likely look for validation of Intel's
bottom call in AMD's report. Intel is the No. 1 maker of PC chips
followed by AMD, so a sign of improving demand for Intel could bode
well for AMD.
The Sunnyvale, Calif.-based chip maker is expected to report a
loss of 66 cents a share on revenue of $1 billion, according to a
consensus survey by FactSet Research. For the year-earlier period,
the company reported adjusted results of a loss of 51 cents a share
on revenue of $1.5 billion.
"I think we'll see an improving outlook from [AMD], but like
Intel, the past quarter will be painful," analyst Rob Enderle of
the Enderle Group wrote MarketWatch in an email.
Analyst Crawford Del Prete of International Data Corp. said: "I
suspect it will be a tough quarter" for AMD.
"I expect that pricing was probably very tough, although
consumer demand for PCs was robust (compared to commercial), and it
is a space where [the company has] an important footprint," he
added. "Looking forward, it will be important to see if they see
the same trends as Intel, and if they see the market hitting
bottom."
Roger Kay of Endpoint Technologies Associates noted AMD's strong
focus on the consumer market, saying: "Consumer seems to have held
up better than commercial. So AMD could be on par or better due to
that emphasis, but this has to be taken against a background of the
company's having given up some of its technological edge in recent
quarters to arch-rival Intel. Share loss could swing results the
other way."
However, with the uncertainty in the broader economy, BMO
Capital Markets analyst Brian Piccioni has been less upbeat about
AMD, saying in a March 5 note: "We continue to believe AMD will
perform poorly in a deteriorating macro environment."
Like other semiconductor manufacturers, AMD has reeled from the
downturn that has led to a steep decline in demand in both the
consumer and corporate tech markets.
The company also has had to deal with its own issues. Production
missteps caused it to fall behind Intel, and had problems digesting
its acquisition of ATI Technologies.
But AMD recently has bounced back, earning positive reviews for
new products, including a new server chip and new graphics products
that benefited from buying ATI, analysts said. The company also
recently spun off its manufacturing facilities into a new company
called GlobalFoundries, a move that analysts also say should help
ease its financial burden.
"AMD has had a tough quarter but they have had a number of
recent mobile-design wins with products that are much
higher-profile than they typically get, and their server parts seem
to be moving well," according to Enderle.
-By Benjamin Pimentel, 415-439-6400;
AskNewswires@dowjones.com