AMD Sales Beat Analysts' Estimates on Rebound in PC Spending
Advanced Micro Devices Inc., Intel Corp.’s main competitor in computer processors, posted sales that beat analysts’ estimates as more personal-computer makers build products based on AMD chips.
Revenue rose 40 percent to $1.65 billion, AMD said today in a statement. That compares with the $1.55 billion average of estimates compiled by Bloomberg. Profit, minus certain items, was 11 cents a share. Analysts projected 6 cents.
PC makers including Sony Corp. added laptop models that use its chips, Sunnyvale-based AMD said. The company increased its profitability, widening its gross margin by 8 percentage points to 45 percent in the quarter. Corporations are beginning to replace older PC networks and add servers to data centers, boosting demand for semiconductors, Intel said this week.
“The numbers look good across the board,” said Doug Freedman, an analyst at Gleacher & Co. in San Francisco, who recommends buying the stock. “We’re seeing pretty strong margin results.”
AMD rose 11 cents, or 1.5 percent, in late trading to $7.47, after falling 3 cents to $7.41 today on the New York Stock Exchange. The stock has dropped 23 percent this year.
The company said it expects revenue to be “up seasonally” in the current quarter. Sales will increase 5 percent to 10 percent from the second quarter, Chief Financial Officer Thomas Seifert said on a conference call.
The company is “feeling good” about PC consumption for the rest of the year, said Chief Executive Officer Dirk Meyer.
Profitability Widens
Gross margin, or the percentage of sales remaining after deducting the cost of production, was 37 percent a year earlier.
Analysts and investors focus on whether AMD is able to keep pace with the revenue gains made by Intel, an indication of the competitiveness of AMD products. Intel reported record quarterly sales on July 13, topping analysts’ estimates with a gain of 34 percent from a year earlier.
Global PC shipments rose 21 percent in the second quarter, according to Stamford, Connecticut-based Gartner Inc., surpassing the research firm’s 19.3 percent forecast.
AMD is trying to turn around its finances after its 2006 acquisition of ATI Technologies Inc. increased debt. To lessen its spending requirements in an industry where new factories can cost more than $4 billion, AMD spun off its plants into a joint venture with the government of Abu Dhabi.
The company’s second-quarter net loss narrowed to $43 million, or 6 cents a share, from $355 million, or 49 cents, a year earlier.
Meyer said a planned combination of a graphics processor and microprocessor, called Llano, will be delayed by about two months because of hiccups in production-technology development. A similar product called Ontario, which will work in low-cost netbook and notebook computers, will be introduced faster than originally planned and will ship for revenue in the fourth quarter of this year, he said.
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
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