Jan. 23 (Bloomberg) -- Advanced Micro Devices Inc., the second-largest maker of processors for personal computers, reported fourth-quarter revenue that topped analysts’ estimates, helped by sales of chips that run servers.
Sales were $1.16 billion, the company said yesterday in a statement. That compared with an average analysts’ estimate of $1.15 billion, according to data compiled by Bloomberg. AMD’s loss for the period, before certain costs, was $102 million, or 14 cents a share, while analysts predicted a loss of 18 cents.
AMD is firing workers and selling assets to free up cash for new products, aiming to mitigate its dependence on the PC market, which is heading for a second straight annual decline as consumers turn to tablets and smartphones. In server chips, the company is working to integrate technology from ARM Holdings Plc into its processors to mount a bigger challenge to Intel Corp., whose 96 percent market share dwarfs AMD’s 4 percent. AMD said revenue from chips for servers, the machines that run data centers, rose from the prior quarter.
“They’ve got a good pipeline,” said Hans Mosesmann, an analyst at Raymond James & Associates Inc., who has an outperform rating on AMD shares.
AMD shares climbed 11 percent to $2.73 at the close in New York. The stock lost 56 percent of its value in 2012, making it the worst performer in the Philadelphia Semiconductor Index.
Even as a surge in sales of tablets erodes PC demand, the devices could provide another opportunity for AMD as they increase the need for servers that provide mobile data, Chief Executive Officer Rory Read said on a conference call yesterday to discuss earnings.
“There’s a tsunami of devices that are beginning to emerge, and they’re connected on a cloud,” he said.
In the fourth quarter of 2011, AMD had profit before certain costs of $138 million, or 19 cents a share, on sales of $1.69 billion. Excluding certain items, gross margin -- the percentage of sales left after subtracting production costs -- narrowed to 39 percent in the recent period from 46 percent a year earlier, AMD said.
First-quarter revenue will decline 6 percent to 12 percent from the fourth quarter’s, AMD said. That indicates a range of $1.02 billion to $1.09 billion, compared with an average analyst projection of $1.11 billion, according to data compiled by Bloomberg.
The Sunnyvale, California-based company has struggled with low cash reserves as its PC-chip sales dwindled in consumer and business markets. In September, Chief Financial Officer Thomas Seifert resigned, disrupting the company’s effort to restructure. Devinder Kumar was appointed as CFO on Jan. 2 after serving as interim finance chief since Seifert’s departure.
Cash and equivalents dropped to $549 million at the end of the fourth quarter from $776 million at the beginning of the period, AMD said. Total cash, equivalents and marketable securities at the end of the quarter was $1.2 billion.
As part of its effort to cut expenses and preserve cash, the company reduced computer-chip orders from supplier Globalfoundries Inc. last month. At the time, Kumar said AMD would return to generating cash from operations in the second half of this year.
“They tried to give investors some comfort that they have the runway to develop some products,” said Betsy Van Hees, an analyst at Wedbush Securities Inc., before the earnings report. “I think people were concerned about liquidity.”
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