Advanced Micro Devices reported relatively weak second-quarter earnings as it suffered more than its share of headaches from a softening personal computer market.
The chip maker, which is a perennial No. 2 to Intel in PC microprocessors, reported net income of $37 million, compared with $61 million a year ago. Revenues were $1.41 billion, down 10 percent compared with $1.57 billion last year. GAAP earnings per share were 5 cents a share, cmpared with 8 cents a share a year ago. Non-GAAP earnings were 5 cents a share.
Analysts were expecting non-GAAP net earnings of 7 cents a share and revenues of $1.41 billion for the quarter. For the year, revenue is projected to roll in at $6.12 billion. In after-hours trading, AMD stock is down 3.7 percent.
The results aren’t great for Rory Read, who became chief executive of Sunnyvale, Calif.-based AMD in August, 2011. He replaced prior CEO Dirk Meyer with a promise of more consistent performance over time. But, like Intel, AMD is suffering from worldwide economic headwinds and tough competition for PCs from Apple’s iPad.
“Overall weakness in the global economy, softer consumer spending and lower channel demand for our desktop processors in China and Europe made the closing weeks of the quarter challenging,” said Read in a statement. “We are taking definitive steps to improve our performance and correct the issues within our control as we expect headwinds will continue in the third quarter as the industry sets a new baseline.”
He added, “We remain optimistic about our core businesses as well as future opportunities with our competitively differentiated next-generation Accelerated Processor Units (APUs). Our recently launched Trinity APU continues to gain traction with customers. We are committed to driving profitable growth.”
Earlier this month, AMD had warned that revenues would be down 11 percent sequentially from the first quarter, in contrast to its previous forecast for a 3 percent revenue increase. Some analysts downgraded their estimates after the warning.
AMD said its Computing Solutions segment revenue decreased 13 percent sequentially and year-over-year. The sequential decrease was driven primarily by lower desktop channel sales in China and Europe as well as a weaker consumer buying environment impacting sales to PC makers.
Patrick Moorhead, analyst at Moor Insights & Strategy, said, “AMD had a challenging quarter driven primarily by product transitions and weakness in the do-it-yourself (DIY), or “channel” business in China and Europe. The good news for AMD in Q3 is they will have most of the Trinity and Brazos 2 transition complete and Windows 8 uptick in Q4.”