AMD revenue beats Street but shares fall
SAN FRANCISCO (Reuters) - Advanced Micro Devices Inc reported better-than-expected revenue as PC and server spending rebounded, but investors cashed out of a rally triggered by stellar Intel Corp results.
The company said on Thursday that second-quarter sales would be seasonally weaker, in contrast with Intel's bullish comments on corporate spending bouncing back in 2010.
Shares of AMD -- which had posted 12 consecutive quarters of losses until the fourth quarter -- fell 4.5 percent as investors sold out of an 8 percent rally since Intel.
Industry bellwether Intel on Tuesday forecast better-than-expected margins and revenue, propelling chipmakers' stocks higher in ensuing days.
Gross margins for the chip maker grew to 43 percent from 42.74 percent the same time last year. Gross margin for the seasonally stronger fourth quarter was 44.65 percent.
The company said it targets gross margins between 40 and 45 percent for 2010, and expects that number to reach "beyond 45 percent" gross margin in the longer term.
"They continue to put up a nice job with the numbers regardless of the end-market demand," said Broadpoint Amtech analyst Doug Freedman.
"Management's demonstrating good execution," he said.
The company's results also included a one-time non-cash gain of $325 million from AMD's stake in its recently spun-off contract chip manufacturing arm, GlobalFoundries.
Revenue rose to $1.57 billion, versus the Wall Street expectation of about $1.54 billion, according to Thomson Reuters I/B/E/S.
AMD said on Thursday net income rose to $257 million, or 35 cents per share in its fourth quarter ended March 27, after a loss of $416 million in the year-ago period.
The chip maker said it expects revenue to be "down seasonably" for the second quarter.
Shares of the Sunnyvale, California-based company fell 4.5 percent to $9.70 after closing at $10.16, gaining 2.7 percent in the regular session on the New York Stock Exchange.