Advanced Micro Devices Set To Release Q3 Results

(RTTNews) - Chipmaker Advanced Micro Devices Inc. (AMD) is due to release its third-quarter results after the market close on October 15. The company expects third-quarter revenue to increase 6%, plus or minus 3%, sequentially. AMD's second-quarter revenue was $942 million.

AMD, known for its processors for personal computers, have been negatively impacted by the slowing demand for PCs and notebooks as tablets and smartphones gained prominence. The company is also losing market share to its larger rival Intel Corp. (INTC) and also faces competition from Nvidia Corp. (NVDA). To prop up, Advanced Micro Devices has diversified its portfolio and has adopted a restructuring plan.

Organizational Actions...

Earlier this month, Advanced Micro Devices said it adopted a restructuring plan that provides for a workforce reduction of about 5% of the company's global workforce.

The plan, which is focused on the company's ongoing efforts to simplify its business and align resources around its priorities of building great products and deepening customer relationships, includes organizational actions such as outsourcing certain IT services and application development. The plan also anticipates a charge for the consolidation of certain real estate facilities.

The Sunnyvale, California-based company said it currently expects to record restructuring and asset impairment charges totaling about $42 million resulting from the plan. The company expects to record a majority of the restructuring charge in the amount of about $41 million in the third quarter of fiscal year 2015.

The savings from the plan are anticipated to be about $2 million and $7 million in the third and fourth quarters of fiscal year 2015, respectively. The company anticipates savings of about $58 million in fiscal year 2016.

The actions associated with the plan are expected to be substantially completed by the end of fiscal year 2016.

Sept. 28, Advanced Micro Devices was in talks to sell about a 25% stake to private-equity firm Silver Lake Management before the negotiations stalled, Bloomberg reported citing people familiar with the matter.

The two sides, which met over the summer, have put the discussions on hold after failing to agree on a price and strategy. AMD is also considering other strategic options, the report said.

Recent Happenings

October 5, AMD announced a collaboration with Oculus and Dell to equip Oculus Ready PCs with AMD Radeon GPUs, starting at $999USD. The powerful PCs are designed to deliver stunning gaming performance and enable spectacular VR experiences for consumers around the world by leveraging AMD VR leadership with LiquidVR and Graphics Core Next architecture.

September 29, the company introduced its most powerful line of AMD PRO A-Series mobile and desktop processors - formerly codenamed "Carrizo PRO" and "Godavari PRO" - to deliver exceptional value and performance for today's challenging workloads. The new line of AMD PRO A-Series processors offer enhanced performance, reliability and opportunity to business users and IT decision makers and are designed for the future with Microsoft Windows 10. With its AMD PRO mobile processors, AMD powers some of the first-to-market Windows 10-enabled commercial notebook systems for those looking to upgrade.

AMD also introduced a new AMD PRO A12 processor, the fastest AMD PRO notebook processor with 3.4GHz CPU max frequency.

Sept. 16, AMD announced an agreement with Mentor Graphics Corp. (MENT) to now provide customers access to Mentor Embedded Sourcery CodeBench Lite for AMD Embedded ARM solutions alongside AMD x86 Embedded solutions. The agreement strengthens AMD's technology partnership with Mentor Graphics and creates a consistent development ecosystem across processor architectures.

Q2 Performance

In the last quarter, the company reported a wider loss, as revenues continued to plunge due to weakness in the PC industry. However, the adjusted loss for the quarter was in line with Wall Street expectations.

Second-quarter net loss was $181 million or $0.23 per share compared to a loss of $36 million or $0.05 per share incurred a year ago.

Excluding items, adjusted loss for the quarter was $0.17 per share compared to a profit of $0.05 per share a year ago. Seventeen analysts polled by Thomson Reuters estimated a loss of $0.17 per share for the quarter. Analysts' estimates typically exclude certain special items.

AMD's revenues for the second quarter declined 35% to $942 million from $1.44 billion a year ago. Twenty-four analysts had a consensus revenue estimate of $950.5 million for the quarter.

The company said its revenues dropped largely due to lower sales of client and graphics processor products and ongoing weak PC demand. Computing and graphics segment revenues dropped 54%, while enterprise, embedded and semi-custom segment revenues dropped 8% year-over-year.

Gross margin dropped sharply to 25% from 35% a year ago.