AMD Hit Hard by Weakening PC Market
The company sees its second-quarter revenue fall 35 percent and losses mount to $181 million after consumer PC demand declines.Advanced Micro Devices executives were in New York in May to talk to financial analysts and journalists about their strategy for making the troubled chip maker consistently profitable. A key part of that plan calls for reducing AMD's reliance on low-cost PCs and focusing its efforts in such markets as the data center, semicustom chips and high-end PCs. However, stark evidence of AMD's dependence on PCs came to the forefront in the second quarter. Weaker-than-expected demand for consumer PCs hit the company hard, causing AMD's quarterly revenue to fall by 35 percent over the same period last year, its losses to jump to $181 million and its hopes of a profitable second half of the year to fall by the wayside. A strong showing by AMD's Enterprise, Embedded and Semi-Custom business unit—which saw revenue grow 13 percent over the first quarter but decline 8 percent year-over-year—couldn't offset the problems with the Computing and Graphics group, which generated $379 million in sales in the second quarter, compared with $532 million a year earlier. AMD President and CEO Lisa Su, in a conference call July 16 with analysts and journalists to discuss the second quarter earnings, said the numbers were disappointing, but that the company would continue to execute on its strategy. Su said she expects new products and wins will help boost the company's fortunes in the near future. These include its Carrizo processors and graphics cards with the new high-bandwidth memory technology, the Zen high-end PC chip architecture scheduled to arrive next year, and the growth in the semicustom chip business that has put AMD silicon into the latest game consoles from Microsoft, Sony and Nintendo.
Company executives a week ago warned that slowing consumer PC sales were going to hit the company's financial numbers hard. Analysts with IDC and Gartner earlier in July both said they expected global PC shipments to slow this year, even as the industry gears up for Microsoft's release of the Windows 10 operating system later this month.