By Noel Randewich
SAN FRANCISCO, July 18 Advanced Micro Devices
forecast stronger-than-expected revenue growth of 22
percent in the third quarter from the second, as the chip maker
expands into new game consoles and other markets to offset
slowing sales of personal computers.
However, the stock reversed earlier gains on Thursday after
AMD said gross margins would fall as it seeks a foothold in game
AMD, which for decades has competed against market leader
Intel Corp in supplying chips for PCs, is rushing to
refocus on new markets as consumers buy fewer laptops and more
tablets and smartphones.
AMD processors are being used in Microsoft Corp's
upcoming Xbox One and Sony Corp's next-generation
PlayStation game consoles. These are largely behind AMD's upbeat
AMD said its gross margin in the second quarter was 40
percent and would fall to about 36 percent in the third quarter.
Analysts on average had expected a third-quarter gross margin of
With consumers increasingly playing games on tablets, it is
also unclear how many of the new consoles Microsoft and Sony
would sell, but optimism about the impact on AMD's revenue has
helped drive its stock up 73 percent since the beginning of
Bernstein analyst Stacy Rasgon said AMD's gross margin
forecast was probably behind the after-hours drop in the
AMD's report comes after Intel warned on Wednesday that it
does not expect revenue to grow in 2013 due to slowing PC
Global shipments of personal computers dropped 11 percent in
the second quarter, the fifth straight quarterly decline in a
market that has been devastated by the popularity of tablets.
AMD reported second-quarter revenue of $1.161 billion, down
from $1.413 billion in the year-ago quarter. It said
third-quarter revenue would rise 22 percent, plus or minus 3
percent, compared with the June quarter. That increase would be
about $1.416 billion.
Analysts, on average, had expected revenue of $1.108 billion
in the second quarter and $1.223 billion in the third quarter,
according to Thomson Reuters I/B/E/S.
AMD posted a net loss of $74 million, or 10 cents a share,
in the second quarter, compared with a profit of $37 million, or
5 cents a share, in the same quarter last year.
The company said its non-GAAP loss per share was 9 cents,
better than the 12-cent loss expected by analysts.
AMD's stock declined 3.66 percent in extended trade after
closing up 5.94 percent at $4.64.