Advanced Micro Devices (AMD) posted a wider than expected loss and disappointing margins last night, sending its shares spiralling more than 12 per cent lower.
The company said second quarter gross margins - which it called “disappointing” - slid to 37 per cent from 43 per cent in the previous quarter. And it forecast that chip revenues would rise just marginally in the current quarter.
AMD's tepid showing stood in stark contrast to much-larger rival Intel Corp, which surprised markets this month and lifted industry sentiment by reporting sharply better than expected earnings.
“While we increased cash, exceeded our revenue plan and reduced operating expenses in the second quarter, gross margin was disappointing,” CEO Dirk Meyer said in a statement.
Investors had hoped rosy forecasts from Intel, and to a lesser degree IBM, signalled the tech industry slump might have hit bottom.
But AMD, which has struggled to safeguard its market share against Intel, reported a net loss in the second quarter ended June 27 of $335 million, or 49 cents a share.
Excluding certain items, AMD posted a 62 cent loss, compared with the 53 cent loss forecast by analysts, according to Reuters Estimates.
Revenue slid 13 per cent from a year ago to $1.18 billion from $1.36 billion, a tad above expecta AMD, which has effectively split itself into a chip designer and a semiconductor foundry, said revenues from the chip arm would be “up slightly” in the fiscal third quarter.
In contrast, Intel, saying consumer PC demand was improving, projected current-quarter revenue far above Wall Street forecasts.
Reuters