AMD Loss Widens, Outlook Weak; Shares Slip

(RTTNews) - Shares of Advanced Micro Devices Inc. (AMD) tanked 9 percent in extended trade on Thursday, after the chip maker reported a first-quarter loss that widened on lower sales. The loss and revenues for the quarter also missed Wall Street estimates. Looking ahead, the company detailed some weak sales outlook for the second quarter.

Sunnyvale, California-based AMD's first-quarter loss widened to $180 million or $0.23 per share from last year's loss of $20 million or $0.03 per share.

Excluding items, adjusted loss for the quarter was $73 million or $0.09 per share, compared to adjusted earnings of $35 million or $0.05 per share a year ago. On average, 15 analysts polled by Thomson Reuters expected a loss of $0.05 per share for the quarter. Analysts' estimates typically exclude special items.

AMD's revenues for the first quarter fell 26 percent to $1.03 billion from $1.40 billion a year ago. Twenty-two analysts had a consensus revenue estimate of $1.05 billion for the quarter.

The company said its revenues dropped largely due to lower sales of client and graphics processor products and seasonally lower semi-custom sales. Computing and graphics segment revenues dropped to $532 million from $861 million last year, due to decreased desktop and notebook processor revenues. Enterprise, embedded and semi-custom segment revenues dropped to $498 million from $536 million last year.

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 competition from Nvidia Corp. (NVDA).

However, the company has diversified its portfolio and currently make chips for video game consoles in addition to PCs. The company manufactures semi-customer SOCs for Microsoft's Xbox One and Sony's PlayStation 4.

Commenting on the results, CEO Lisa Su said, "Under the backdrop of a challenging PC environment, we are focused on improving our near-term financial results and delivering a stronger second half of the year based on completing our work to rebalance channel inventories and shipping strong new products."

Gross margins for the quarter dropped to 32 percent from 35 percent last year.

Looking forward, AMD expects second quarter revenue to drop 3 percent, plus or minus 3 percent, sequentially. Analysts currently estimate revenues of $1.13 billion for the quarter.

AMD closed Thursday's trading at $2.87, up $0.17 or 6.30%, on the NYSE. The stock, however slipped $0.23 or 8.01% in the after-hours trade.