April 19 (Bloomberg) -- Advanced Micro Devices Inc., the No. 2 maker of personal-computer processors, forecast second-quarter sales that may surpass some analysts’ estimates as it generates more revenue from outside the slumping PC market.
Revenue in the current period will rise 2 percent, plus or minus 3 percent, from the first quarter’s $1.09 billion, the Sunnyvale, California-based company said yesterday in a statement. That indicates a range of $1.08 billion to $1.14 billion. Analysts on average had estimated sales of $1.07 billion, according to data compiled by Bloomberg.
Chief Executive Officer Rory Read aims to get 20 percent of sales from outside the PC industry by the fourth quarter. Chip orders for game consoles from Sony Corp. and Microsoft Corp. may be helping him make progress on that goal and compensating for some of the slowdown in his main businesses, said Daniel Berenbaum, an analyst at MKM Partners LLC.
“PCs are bad, we know that -- AMD has been losing market share,” Berenbaum said. He has a neutral rating on the company’s stock. “The place where there could be upside is on consoles.”
Microsoft will use an AMD processor in its next Xbox game machine, people with knowledge of the matter said earlier this month. That followed an announcement by Sony that the PlayStation 4 will also use AMD parts.
AMD is counting on that new business to help it weather record declines in demand for desktop and laptop computers as consumers defect to smartphones and tablets for getting online. Global PC shipments fell 14 percent in the three months that ended in March -- the steepest quarterly drop on record -- as Microsoft’s newest operating system failed to ignite demand, IDC said last week. That was worse than the 7.7 percent decrease the researcher had forecast.
At the end of 2012, AMD had 15 percent of the market for PC processors, compared with 85 percent for Intel, according to Mercury Research.
Before the report, AMD shares gained 4.6 percent to $2.51 at yesterday’s close in New York, rallying in the last half-hour of trading from an earlier decline. The shares traded as high as $2.58 and as low as $2.33 after the release.
“In this environment, with these expectations, it’s a pretty good report,” said Stacy Rasgon, an analyst at Sanford C. Bernstein & Co. “Expectations were really low.”
For the first quarter, AMD’s net loss narrowed to $146 million, or 19 cents a share, from a loss of $590 million, or 80 cents, a year earlier. Sales fell 31 percent to $1.09 billion, while analysts had forecast $1.05 billion.
Sales in AMD’s computer-chip unit fell 9 percent from the prior period to $751 million. While server-chip sales at that unit were up, following the same trend Intel reported earlier this week, total sales were dragged down by lower shipments of desktop and notebook chips.
AMD’s graphics division recorded a 3 percent increase in revenue from the fourth quarter to $337 million. That unit was bolstered by higher royalties for game consoles, AMD said in a statement.
AMD has fired workers and sold assets, seeking to generate enough cash to overhaul its product line in an attempt to break into new markets. Some analysts have expressed concern that continued losses risk diminishing the company’s cash reserves to the point where it might not be able to repay debts.
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