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AMD revenue falls as financial struggles continue

The chip maker has been struggling with a slow PC market and is trying to diversify into tablets and ARM-based servers

By Agam Shah
January 22, 2013 05:36 PM ET

IDG News Service - Advanced Micro Devices' financial struggles continued in the fourth quarter, with revenue sinking 32 percent due to slow chip sales and charges tied to restructuring and inventory adjustments.

AMD reported revenue of US$1.16 billion for the quarter, down from $1.69 billion a year earlier. Analysts had been expecting revenue of $1.15 billion, according to a consensus estimate compiled by Thomson Reuters.

Its net loss was $473 million, wider than the loss of $177 million it reported for the same quarter a year earlier. The latest figure includes a charge of $209 million for reducing its purchasing obligations to GlobalFoundries, which manufactures AMD's chips, and an additional $90 million in charges related to a restructuring.

AMD's financial woes are tied to the slowdown in the PC industry, which declined last year for the first time in more than a decade. In December, AMD cut its chip orders from GlobalFoundries because of the weak sales environment.

Also last quarter, AMD said it will lay off 15 percent of its worldwide staff in an effort to cut costs and return to profitability.

The PC slowdown has also affected Intel, which reported last week that sales from its PC client business in the most recent quarter fell by 3 percent.

AMD is trying to reduce its dependence on PCs by diversifying in the tablet market and into new server markets. Earlier this year it showed off a tablet based on an upcoming chip called Temash, which will be available in products in the first half this year. It's also trying to expand beyond the x86 server business, and is expected to sell ARM-based server chips starting in 2014.

AMD is changing its product portfolio to adapt to the changing market, CEO Rory Read said in a statement Tuesday. The company will deliver new chips and products this year to expand its product line, he said.

Sales in AMD's Computing Solutions division, which deals in chips for PCs, servers and tablets, were $829 million during the quarter just ended, down 32 percent compared to the previous year's fourth quarter.

Demand also fell for AMD's graphics cards, leading to a 15 percent year-on-year revenue decline for its graphics unit.

On a pro forma basis, excluding one-time charges and other items, AMD would have reported a net loss of $102 million for the quarter, or $0.14 a share. Analysts had been expecting a loss of $0.20 per share.

For the first quarter that just got under way, AMD expects to report a sequential decline in revenue of 9 percent, plus or minus 3 percent, it said.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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