AMD flags possible stop to revenue declines, shares soar | Reuters - Firstpost
You are here:

AMD flags possible stop to revenue declines, shares soar | Reuters

  Updated: Apr 22, 2016 05:30 IST

#Business   #chinese   #Copyright   #Entertainment   #India   #science   #United Kingdom  

Advanced Micro Devices Inc's forecast implied that the struggling chipmaker could post a surprise rise in current quarter revenue, ending a run of six quarters of declines, helped by strong demand for its chips and a new licensing deal.

AMD also reported a lower-than-expected drop in revenue for the third quarter in a row due, in part, to the licensing deal, helping send the company's shares surging 21 percent in trading after the bell on Thursday.

The company forecast second-quarter revenue would grow 15 percent, plus or minus 3 percent, sequentially, which translates to $928.1 million to $985.5 million.

That implies revenue could be higher than the $942 million from a year earlier. Analysts on average were expecting revenue to fall to $887.8 million, according to Thomson Reuters I/B/E/S.

AMD said on Thursday it signed a $293 million agreement to license its processor technology to a joint venture it formed with Tianjin Haiguang Advanced Technology Investment Co Ltd, an investment unit of the Chinese Academy of Sciences.

The technology will help China produce its own server chips for datacenters, a market dominated by Intel Corp, one of AMD's biggest rivals along with Nvidia Corp.

"This deal is at least one victory lap on monetizing its IP. I expect more to come in the future, especially with GPUs (graphic processing units)," Moor Insights & Strategy analyst Patrick Moorhead said.

AMD said it expects the licensing deal to add about $52 million to 2016 revenue, with $7 million already recognized in latest first quarter.

Chief Executive Lisa Su said AMD's revenue would increase more than usual on a sequential basis this quarter due to strong demand for its graphics chips and semi-custom chips, designed to suit customers' specific needs.

AMD is slated to ship its Polaris GPUs in the middle of the year, which it hopes will lead to revenue growth in 2016 after 2015 revenue declined 27.5 percent.

The company's first-quarter revenue fell 19.2 percent year-over-year, to $832 million, but beat analysts estimates of $818.2 million.

Net loss narrowed to $109 million, or 14 cents per share, from $180 million, or 23 cents per share. Excluding items, AMD lost 12 cents per share. Analysts were expecting a loss of 13 cents.

AMD's shares were up 21 percent at $3.17 in extended trading. They had fallen 8.7 this year through Thursday's close, while the broader semiconductor index had gained 0.6 percent.

(Reporting by Kshitiz Goliya and Rishika Sadam in Bengaluru; Editing by Sayantani Ghosh and Savio D'Souza)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Comment using Disqus

Show Comments