Advanced Micro Devices Inc. (AMD), the second-largest maker of processors for personal computers, rose the most in more than 20 months after forecasting third-quarter sales that exceeded analysts’ estimates, citing new chip orders.
Revenue in the current period will increase 10 percent, plus or minus 2 percentage points, from the second quarter, Sunnyvale, California-based AMD said yesterday. That indicates sales of as much as $1.76 billion. Analysts were estimating $1.7 billion, the average forecast in a Bloomberg survey.
Since Chief Executive Officer Dirk Meyer resigned in January, the company has been searching for a replacement to lead an effort against rival Intel Corp. (INTC) AMD’s new products, called Fusion, combine the functions of processors and graphics chips, aiming to win laptop market share. Analysts had been predicting a smaller sales gain amid evidence of lower consumer PC demand in developed markets.
“It’s a pretty good guide in a weak consumer PC market,” said Sujeeva De Silva, a San Francisco-based analyst at ThinkEquity LLC. “Fusion has done pretty well out of the gate. The success is showing.”
The shares rose $1.25, or 19 percent, to $7.75 at 4 p.m. on the New York Stock Exchange, for the biggest gain since November 2009. The stock had declined 21 percent this year before today.
AMD’s third-quarter forecast for as much as 12 percent sequential sales growth compares with an average analyst prediction of 8 percent, and is larger than the percentage growth at the midpoint of Intel’s revenue forecast for the period, said De Silva, who recommends buying AMD shares.
Second-quarter net income was $61 million, or 8 cents a share, compared with a loss of $43 million, or 6 cents, a year earlier, AMD said yesterday in a statement. Analysts had predicted profit of 7 cents, the average estimate in a Bloomberg survey. Sales fell 4.8 percent to $1.57 billion.
Revenue dropped because of slower demand for server chips, Chief Financial Officer Thomas Seifert said on a conference call yesterday. Gross margin, or the percentage of revenue remaining after deducting the costs of production, was 46 percent.
Seifert is running AMD while the company looks for a successor to Meyer, who left after a dispute with the board over how quickly the company will be able to get into the market for mobile-phone and tablet-computer chips. AMD said yesterday it plans to have a processor for tablets in 2013.
“The search for a new CEO remains a top priority,” said Harry Wolin, AMD senior vice president and general counsel, on the conference call. “Meeting a timeline is not the driving force for the search. Finding the right candidate is.”
Wolin declined to say whether the company will be able to name a new leader this quarter.
Seifert has said he doesn’t want the top position permanently. The company was conducting a second round of interviews with a number of candidates, two people with knowledge of the hiring process said earlier this week.
People familiar with the search said last month that AMD had approached and been rebuffed by at least four candidates. Apple Inc. Chief Operating Officer Tim Cook, Oracle Corp. Co- President Mark Hurd, EMC Corp. Chief Operating Officer Pat Gelsinger and Carlyle Group Managing Director Greg Summe spurned the chipmaker’s overtures, the people said at the time.