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AMD posts better than expected earnings

by on22 July 2011

Seven million APUs sold in Q2
AMD posted slightly better than expected earnings for Q2, fuelled by healthy demand for its latest series of APUs.

AMD managed to sell more than 7 million APUs in the second quarter. This amounts to more than half of its total shipments since it launched Zacate APUs back in December. The market welcome the good news and AMD’s shares rose 4.2 percent in extended trading Thursday.

Despite the improvement, AMD earned just $61 million in the past quarter, but this is still a significant improvement over the $43 million loss reported in Q2 2010. Furthermore, AMD is expecting the positive trend to continue into Q3 and it expects revenue to increase by 8 to 12 percent.

Still, AMD missed some of its sales targets. Revenue in AMD’s CPU division was flat due to a slump in server chip sales. Revenue in AMD’s graphics division also fell by 17 percent compared to last year. The results come as no surprise as AMD is currently transitioning to new CPU architectures and new developments in the graphics market are scheduled for late Q4 or early Q1 2012, depending on the pace of 28nm process introduction by TSMC.

It is worth noting that AMD is planning to phase out AM3-socket processors by Q1 2012, replacing them with Brazos and Llano chips in the entry level and mid-range, and FX-series Zambezi processors in the high end. The fact that AMD has already managed to beat analysts’ expectations is an encouraging development. AMD’s x86 market share slumped to 10.1 percent in Q1 2011, but there is a strong chance it will rebound towards the end of the year.

Curiously, AMD is going through this crucial transition without a CEO. Former CEO Dirk Meyer was ousted by the board half a year ago, and the chipmaker has not named a successor since. Some might argue that AMD is doing better without a CEO, but it's worth noting all the new products coming on line in 2011 were conceived under Meyer’s tenure.

On a negative note, both AMD and Intel are bracing for a slowdown in the global chip market, and market research companies are already forecasting a further slump in PC sales.
Last modified on 22 July 2011
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