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Advanced Micro Devices reported earnings that missed Wall Street earnings targets, just a little more than a week after it appointed Lisa Su as the new chief executive in a surprise change.

AMD’s earnings are closely watched as a bellwether for low-cost computers, as the company is the No. 2 maker of PC microprocessors, and it is also one of the “big two” graphics chip makers for PCs. The company has been trying to adapt to the shift toward mobile by creating alternative chips in custom markets where Intel, its giant rival, doesn’t play.

AMD reported net income of 3 cents a share on revenue of $1.43 billion, down 2 percent from a year ago. Analysts were expecting earnings of 4 cents per share before special items and $1.47 billion in revenue. In the third quarter a year ago, AMD reported earnings of 4 cents a share and revenue of $1.46 billion. Analysts had previously estimated that fourth-quarter earnings per share would be 5 cents and revenue would be $1.48 billion.

In a statement, Su said, “AMD’s third-quarter financial performance reflects progress in diversifying our business. Our Enterprise, Embedded, and Semi-Custom segment results were strong; however, performance in our Computing and Graphics segment was mixed based on challenging market conditions that require us to take further steps to evolve and strengthen the financial performance of this business. Our top priority is to deliver leadership technologies and products as we continue to transform AMD.”

Wall Street didn’t like the results. The stock is trading at $2.43 a share in after-hours trading, down 8 percent.

On Oct. 8, Rory Read, 52, stepped down as CEO. Su, 44, was the No. 2 executive, or chief operating officer, under Read. She is the newest female top executive at a major tech company, and she is the first female CEO at 45-year-old AMD.

But she faces a tough challenge. Intel’s executives believe that they gained market share in the third quarter against AMD. AMD is the perennial runner-up to Intel in the PC microprocessor business, but the chipmaker has branched out to dominate some sectors, such as processors for video game consoles like the new PlayStation 4 or Xbox One. Since 2012, AMD has cut its operating costs by 30 percent and kept its cash at about $1 billion. It has also cut back on staff and focused its chip-design efforts. In an interview with VentureBeat, Su said her company won’t walk in Intel’s shadow.

Read joined AMD three years ago after leaving the No. 2 job at one of AMD’s biggest customers, Lenovo. He hired Su in 2012 and appointed her the head of various business units. More recently, she was appointed chief operating officer responsible for AMD’s business units, sales, global operations, and infrastructure enablement teams.

AMD has about $2.2 billion in debt. The company said it plans to reduce headcount by 7 percent by the end of the year, as part of a restructuring that will result in a charge of $57 million.

“While decisions that impact the size of our global team are never entered into lightly, this is the right step to ensure we prioritize our resources and engineering investments in our highest-priority opportunities that can drive improved profitability and long-term growth,” said Su.

For the fourth quarter, Su expects revenue to decrease 14 percent from the $1.43 billion in the third quarter.


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