Advanced Micro Devices Inc. Earnings Cheat Sheet: Margins Shrink

S&P 500 (NYSE:SPY) component Advanced Micro Devices Inc. (NYSE:AMD) reported its results for the third quarter. Advanced Micro Devices is a semiconductor company with manufacturing, research and development, and sales and administrative facilities throughout the world. It provides processing solutions for the computing and graphics markets.

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Advanced Micro Devices Earnings Cheat Sheet for the Third Quarter

Results: Reported a profit of $97 million (13 cents per diluted share) in the quarter. Advanced Micro Devices Inc. had a net loss of $118 million or a loss 17 cents per share in the year earlier quarter.

Revenue: Rose 4.4% to $1.69 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: AMD reported adjusted net income of 15 cents per share. By that measure, the company beat the mean estimate of 10 cents per share. It beat the average revenue estimate of $1.65 billion.

Quoting Management: “Strong adoption of AMD APUs drove a 35 percent sequential revenue increase in our mobile business,”said Rory Read, AMD president and CEO.”Despite supply constraints, we saw double digit revenue and unit shipment growth in emerging markets like China and India as well as overall notebook share gains in retail at mainstream price points. Through disciplined execution and continued innovation we will look to accelerate our growth and refine our focus on lower power, emerging markets, and the cloud.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the second quarter, by 3 cents in the first quarter, and by 3 cents in the fourth quarter of the last fiscal year.

Gross margin shrank 0.9 percentage point to 44.7%. The contraction appeared to be driven by increased costs, which rose 6.3% from the year earlier quarter while revenue rose 4.4%.

Revenue rose last quarter after seeing a drop the quarter before. Revenue fell 4.8% to $1.57 billion in the second quarter from the year earlier.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 25 cents a share to 14 cents over the last ninety days. The average estimate for the fiscal year is now 42 cents per share, down from 59 cents sixty days ago.

Competitors to Watch: Intel Corporation (NASDAQ:INTC), NVIDIA Corporation (NASDAQ:NVDA), MIPS Technologies, Inc. (NASDAQ:MIPS), Texas Instruments Inc. (NYSE:TXN), ARM Holdings plc (NASDAQ:ARMH), Microsoft Corporation (NASDAQ:MSFT), Intl. Business Machines Corp. (NYSE:IBM), Hewlett-Packard Company (NYSE:HPQ), Broadcom Corporation (NASDAQ:BRCM), and Apple Inc. (NASDAQ:AAPL).

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(Source: Xignite Financials)