Chipmaker AMD's quarterly results beat Street, stock jumps
SAN FRANCISCO (Reuters) - Advanced Micro Devices Inc's first-quarter results beat expectations, sending its shares higher as the chipmaker tries to replace dwindling sales of PC chips with its processors for game consoles.
With the PC industry shrinking for eight straight quarter due to consumers' preferences for tablets and smartphones, AMD is expanding into new markets and aims to get half of its revenue from new, fast-growing businesses by the end of 2015.
Chief among those efforts, the Sunnyvale, California, company is supplying processors for Microsoft Corp and Sony Corp's latest game consoles in a bid to make up for its declining PC business.
"This is a company that's still in the midst of a very long-term turnaround but you're seeing some successes," said Ascendiant Capital analyst Cody Acree. "None of this is a flip of a switch overnight. It's a plodding quarterly restructuring that really is going to change who AMD is."
On Wednesday, Sony said it sold more than 7 million PlayStation 4 videogame consoles in just over four months to April 6, double the number of the older version, PlayStation 3, sold in about the same time frame after its launch.
AMD is also planning this year to launch low-power server chips to compete in data centers against Intel's high-end Xeon processors.
WALL STREET WARY
Chip heavyweight Intel on Tuesday posted quarterly results that reinforced some analysts' expectations that the PC industry's decline may be close to hitting bottom.
But Wall Street has been wary of AMD's chances of successfully restructuring into new markets and weathering the PC industry's troubles. Twenty-one analysts tracked by Thomson Reuters give AMD's stock neutral or negative ratings, while just six are positive.
AMD on Thursday reported a net loss of $20 million, or 3 cents per share, for the March quarter, compared with a loss of $146 million, or 19 cents per share a year earlier.
But excluding items, AMD earned 2 cents per share, better than the zero cents per share expected by analysts, according to Thomson Reuters I/B/E/S.
Revenue rose 28 percent to $1.40 billion in the first quarter.
AMD said second-quarter revenue would rise 3 percent, plus or minus 3 percent, from the March quarter. That would be about $1.442 billion.
Analysts on average had expected revenue of $1.34 billion in the first quarter and $1.36 billion in the second quarter.
Shares of AMD rose 5 percent in extended trade after closing down 1.86 percent at $3.69.