AMD Reports Strong Earnings, Revenue Up 23 Percent

After its first positive EPS in two years, the chip maker expects to deliver higher 2016 annual revenue based partly on stronger demand for semi-custom solutions.

Chipmaker Advanced Micro Devices turned in improved quarterly earnings Oct. 20, notching its first positive earnings-per-share report in the last two calendar years, thanks mostly to increased demand for processors it makes for gaming consoles.

The company's Q3 2016 revenues totaled $1.31 billion, up 23 percent year over year and good for a 3-cent return per share. The previous three quarters had shown losses of 10 cents, 12 cents and 5 cents, respectively. Prior to those previous quarters, Q2 and Q3 2015 both resulted in a 17-cent-per-share decline in performance.

Net income in Q3 was $27 million.

AMD attributed the revenue improvement mainly to record sales of semi-custom SoC (system on a chip) and higher GPU (graphics processing unit) and mobile APU (accelerated processing unit) processors. Increased sales of client mobile processors also played a key part in the earnings increase.

However, lower sales of client desktop processors and chipsets gnawed away at the company's revenue. This isn't much of a surprise, as sales of desktop and laptop computers continue to slide globally.

Wall Street analysts had projected flat per-share earnings on $1.21 billion in revenue for the quarter, so AMD did an end-run around those numbers.

AMD President and CEO Lisa Su pointed out that the company's financial results point directly to the progress it is making across its entire business.

"We now expect to deliver higher 2016 annual revenue based on stronger demand for AMD semi-custom solutions and Polaris GPUs," Su said in a press statement. "This positions us well to accelerate our growth in 2017 as we introduce new high-performance computing and graphics products."

The Sunnyvale, California-based company's Computing and Graphics division brought in revenue of $472 million, up 9 percent sequentially and 11 percent from Q3 2015.

AMD's Enterprise, Embedded and Semi-Custom segment revenue totaled $835 million, an increase of 41 percent sequentially and 31 percent year over year, due to higher sales of the semi-custom SoCs.

AMD forecast revenue to decrease 18 percent sequentially in Q4. The stock was down about 6 percent to $6.56 in after-hours trading.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...