San Francisco: Advanced Micro Devices beat earnings expectations, underscoring the PC market’s resilience as the chipmaker launches next-generation processors it hopes will close the gap with Intel Corp.
The perennial runner-up to Intel in the multibillion-dollar global PC microprocessor market recently started shipping its Llano chips.
Industry experts have warned in recent months that the advent of mobile wireless devices will increasingly erode PC sales. But Intel smashed expectations this week, reaffirming the health of the market — for now.
AMD said it has seen strong demand for other recently launched low-cost chips aimed at netbooks, a niche dominated completely by Intel but under pressure from increasing tablet sales.
AMD chief executive Dirk Meyer left the company in early January, after disagreements with its board about the company’s strategy in the exploding market for tablets and smartphones. He has yet to be replaced.
“The board is very happy with the interest we’ve received and is actively interviewing candidates,” chief financial officer Thomas Seifert, who is standing in as chief executive, told analysts on a conference call.
On a non-GAAP basis, AMD earned 8 cents a share, compared with the 5 cents per share that analysts on average expected, according to Thomson Reuters.
“What we saw from the Intel results, and what we’re seeing again from AMD today, doing a bit better than expected, is probably a positive sign about the state of the aggregate PC world,” said Joanne Feeney, an analyst at Longbow Research.
On Tuesday, Intel posted stronger-than-expected results, helping reduce concerns about the impact of Apple’s iPad on PC sales.
Taking on Intel
Sunnyvale, California-based AMD has less exposure than Intel to corporate customers, making it all the more sensitive to consumers’ whims.
And while any growth for AMD in netbooks would increase its market share, the segment has low margins compared with more robust notebook and desktop PCs.
AMD’s Llano chips are aimed at laptops and desktops and will compete with Intel’s recently launched Sandy Bridge chips. Both offer integrated graphics processing meant to make additional graphics chips unnecessary.
Seifert said he expects second-quarter revenue to be flat to down 5% compared with the first quarter.
He maintained his expectation for 11% growth in the PC market this year, in line with other forecasts.
AMD’s first-quarter revenue was $1.61 billion, up 2% year over year.
Analysts had expected revenue of $1.61 billion for the first quarter and $1.59 billion for the second quarter.
Net income in the first quarter was $510 million, or 68 cents a share, compared with $257 million, or 35 cents a share, in the same period last year.
Shares of AMD slipped 0.34% in extended trading after closing up 0.93% at $8.71.