AMD reports Q3 profit after reducing reliance on PCs
AMD's revenue was driven by custom chips for products like Xbox One and PlayStation 4
IDG News Service - Reduced reliance on the PC market helped Advanced Micro Devices turn a profit in the third quarter, with the company looking for faster growth in the quarters ahead.
AMD reported net income of $48 million for the quarter ended Sept. 28, compared with a loss of $157 million in the same quarter last year.
Revenue was $1.46 billion, an increase from $1.27 billion a year earlier. Analysts polled by Thomson Reuters had forecast sales of $1.42 billion for the quarter.
The revenue growth was driven by AMD's semi-custom chip business, which was established this year to make chips for gaming consoles and other non-PC products. AMD's chips will be used in Microsoft's Xbox One and Sony's PlayStation 4, for example, which will ship later this year.
AMD shipped millions of processors to Sony and Microsoft for their consoles, CEO Rory Read said during a call to discuss the earnings.
"We have several strong semi-custom designs moving through the pipeline," Read said.
Semi-custom-chip business revenue grew by more than 26 percent compared to the second quarter of 2013. That business will account for about 50 percent of revenue "from high-growth markets over the next two years," Read said in a statement.
As semi-custom revenue flourished, PC revenue declined. Revenue for the Computing Solutions unit, which deals in PC chips, was $790 million, declining 15 percent year over year. The company also recorded growth in revenue from graphics chips.
AMD earlier this year projected it would record a profit in the third quarter. The company "continued to successfully execute the strategic transformation plan we outlined a year ago," Read said.
AMD has been going through years of restructuring under a new management team led by Read. The company laid off 15 percent of its workforce last October and cut costs by trimming its chip offerings and selling assets. It also forged relationships with more chip manufacturers to cut production overhead.
The company is now expecting a larger chunk of its future revenue to be from its custom chip business as the PC market fades away. AMD has a negligible presence in the tablet market and does not make products for smartphones.
Diversification into new areas will help the company grow through 2016, Read said. Besides custom chips, revenue will also be driven by low-power laptops, tablets, graphics products and dense servers, Read said.
"Two years ago, 90 to 95 percent of our business centered around PCs," Read said. "We see it as an important business, but times are changing."
Read estimated PC shipments will fall by 10 percent both this year and next. The company will keep its PC chip plans modest and manage the product line to match market trends.
- SANS: Next-Generation Datacenters = Next-Generation Security This whitepaper takes a look at some new technology that may allow security teams to implement more flexible and capable protection models in...
- SANS: Protecting Virtual Endpoints with McAfee Server Security Suite Essentials SANS review of McAfees Server Security Suite Essentials that address some of the emerging challenges of securing virtual platforms and cloud environments.
- Safeguarding the Next-Generation Data Center Use of virtual and cloud servers has exploded. Unfortunately, security often lags behind. McAfee recommends looking at innovative solutions in order to erect...
- Aberdeen: Securing the Evolving Datacenter This report highlights ways security technologies and services are evolving to provide the visibility and control needed to deploy workloads flexibly in the...
- Is SQL Server AlwaysOn really as powerful? Tips and Tricks from the field With the introduction of AlwaysOn, Windows Clustering Services is now more critical than ever.
- What Does it Take to Deliver a Superior Customer Experience? The Two Top-Rated Online Retailers, B&H Photo and Crutchfield Electronics, Share Their Secrets Discuss practical CX tools and service methods such as contact center agents and the use of realtime speech analytics to help contact center... All Processors White Papers | Webcasts