AMD Earnings Show Pain of Being No. 2 in Tough PC Market

  • First-quarter sales will fall about 14% sequentially
  • Chipmaker's outlook based on China, console fall off

Advanced Micro Devices Inc., struggling against Intel Corp. and Nvidia Corp. in the declining market for personal-computer components, reported its fifth straight quarter of revenue declines of more than 20 percent -- and forecast another drop in the current period.

First-quarter revenue will be down 14 percent, plus or minus 3 percent, from the preceding period, AMD said in a statement Tuesday. That indicates revenue of $795.1 million to $852.6 million, compared with an average analyst estimate for $897.7 million, according to data compiled by Bloomberg.

AMD’s results highlight the difficulties of having less competitive products in a PC market that’s shrunk over the past four years. The company has lost processor share to Intel and graphic chips orders to Nvidia as both of its larger rivals kept updating their offerings more quickly.

Devinder Kumar, AMD’s chief financial officer, said in a statement that the weaker outlook was “driven by game-console seasonality and a cautious macro environment in China.” The Sunnyvale, California-based chipmaker is the supplier of the main component in Microsoft Corp.’s Xbox One and Sony Corp.’s latest PlayStation.

AMD shares slumped as much as 11 percent in extending trading following the announcement. The stock declined 3.9 percent to $1.95 at the close in New York.

AMD’s fourth-quarter loss was $102 million, or 13 cents a share, compared with a loss of $364 million, or 47 cents, a year earlier. Revenue fell 23 percent to $958 million. Analysts had predicted a loss of 13 cents a share on revenue of $954.8 million.

Last week, market researchers said worldwide PC shipments dropped in 2015, ending the year at fewer than 300 million units for the first time since 2008. PC makers sold 75.7 million machines in the fourth quarter, a decline of 8.3 percent from a year earlier, according to Gartner Inc., failing to get a boost from holiday sales.

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