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AMD does well in the short term

by on22 January 2014

But outlook is bleak

AMD has reported a profit for the fourth quarter, thanks largely to the sale of its chips in Microsoft and Sony’s game consoles. However AMD’s forecast for the current quarter was disappointing and investors pushed its shares 10 percent lower after the results came out.

The chipmaker’s profit for the quarter was $89 million, compared to a loss of $473 million a year earlier. It is the outfit’s second profitable quarter in a row after a string of losses. Revenue climbed 38 percent to $1.59 billion, AMD said. Both the revenue figure and its earnings on a pro forma basis beat the expectations of Wall Street.

The gains came mainly from AMD’s Graphics and Visual Solutions segment, which sells semi-custom chips that are used in products including Sony’s PlayStation 4 and Microsoft’s Xbox One. Combined, the two consoles have sold more than 7 million units in less than two months. That helped lift its graphics revenue by 165 percent, or more than double, to $865 million. Average selling prices for AMD’s GPUs also increased from a year earlier, the company said, thanks to its new R7 and R9 Radeon graphics cards.

The business unit that sells CPUs for PCs and servers was rubbish. Sales were down 13 percent year over year, continuing a pattern from the past six quarters.

President and CEO Rory Read said AMD was hit by slower sales of consumer notebooks, a market where it traditionally does well but that’s being eaten up by tablets. Read claimed that some parts of the PC market may be stabilizing, but AMD still expects the PC market to be down 10 percent in 2014.


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