AMD Proceeds Fall Short of Expectation Says Analysts

By Czarina Ara Lasco

Oct 21, 2016 06:00 AM EDT

AMD is an American multinational semiconductor company based in Sunnyvale, California which is also known for developing computer processors. AMD is the second-largest supplier and only significant rival to Intel in the market.

AMD's revenue will drop 18 percent in the fourth quarter from the $1.307 billion of the previous one. The net loss in the third quarter was $406 million, or 50 cents a share, compared with a loss of $197 million, or 25 cents, in the same period a year prior. Sales went up by 23 percent to $1.31 billion. "The loss was partly caused by a $340 million charge related to a change in a supplier agreement," the company said in a statement.

Chief Executive Officer Lisa Su has made improvement in taking back orders lost to larger rivals Nvidia Corp and Intel Corp., whose stock plummeted in nine months after an unsatisfactory fourth-quarter sales estimate that indicate a lack-luster year-end demand for personal computers and rising inventory.

AMD has become increasingly reliant on orders from Sony Corp. and Microsoft Corp. for custom processors that run game consoles. As demand for the PlayStation and Xbox is highest toward the end of the year, AMD's customers have already built enough devices and inventory to meet that rush and are slowing purchases. "The decline in console chip orders was "normal for this time of year." Unlike larger rival Intel, AMD is seeing no build-up of unused parts in its PC and graphics chip business," said Su.

AMD's stock has increased more than two times its initial stocks this year. This improving results convinced some analysts and investors that it will avoid bankruptcy. "The company is on track with its introduction of new PC processor and server chip designs that will debut next year and prospective customers are pleased with early samples," Su said. "Everyone is focused on our new products and that's where my focus is," she added. "We're executing well."

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