Is the PC Bust Taking AMD Down?
Advanced Micro Devices (NYSE:AMD), the second-largest maker of computer processors, was seeing green in after-hours trading after slightly beating expectations with its fourth-quarter revenue and reporting a smaller-than-expected net loss. Revenue in the three months that ended in December dropped to $1.16 billion on a net loss of 14 cents per share. Analysts had predicted a $1.15 billion in revenue and an 18-cent net loss.
AMD’s struggles, which coincide with falling PC sales, continued last year, but some of its trouble was undercut by high sales of server chips. The company has been trying to integrate server chip technology from ARM Holdings (NYSE:ARM) in an attempt to take on Intel’s (NASDAQ:INTC) supremacy. Intel currently holds a 96 percent market share to AMD’s 4 percent.
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“AMD continues to evolve our operating model and diversify our product portfolio with the changing PC environment,” chief executive Rory Read said in a statement. “Innovation is the core of our long-term growth. The investments we are making in technology today are focused on leveraging our distinctive IP to drive growth in ultra low power client devices, semi-custom SoCs and dense servers.”
However, AMD has struggled and is trying hard to lower its dependence on the PC market, which is predicted to see a second straight annual decline.
AMD’s stock lost 56 percent of its value last year and as part of its effort to cut expenses and preserve cash, the company reduced chip orders from supplier Globalfoundries last month. AMD did not have optimistic predictions for the ongoing first quarter, announcing revenue was expected to fall 6 percent to 12 percent to a range of $1.02 billion to $1.09 billion.
Raymond James analyst Hans Mosesmann, who has an outperform rating on the stock, disagreed and predicted the company would rebound in the second quarter as new tablets begin using its chips. “They’ve got a good pipeline,” Mosesmann told Bloomberg on Tuesday.
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