AMD second-quarter revenue declines harder than anticipated

Posted on Tuesday, Jul 07 2015 @ 10:24 CEST by Thomas De Maesschalck
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AMD issued an update to investors that its second-quarter revenue is expected to come in about 8 percent lower than the previous quarter, compared to previous guidance of down 3 percent, plus or minus 3 percent.

The bad news doesn't stop there, AMD also confesses its non-GAAP gross margin is down to 28 percent, versus previous guidance of 32 percent, and that the firm is taking a one-time $33 million charge on product designs that were started on 20nm but will instead by transfered to the "leading-edge FinFET node" (presumably 14nm).

AMD says the reason for the poor performance is primarily the weaker than expected consumer PC demand. The chip designer's second quarter ended June 27, 2015 so it definitely took them long enough to share the bad news with shareholders.
AMD (NASDAQ: AMD) today announced that revenue for the second quarter ended June 27, 2015 is expected to be lower than previously guided. The company now expects second quarter revenue to decrease approximately 8 percent sequentially, compared to the previous guidance of down 3 percent, plus or minus 3 percent. The sequential decrease is primarily due to weaker than expected consumer PC demand impacting the company's Original Equipment Manufacturer (OEM) APU sales. The company expects second quarter channel sales and channel inventory reduction efforts to be in-line with the company's plans.

The company anticipates non-GAAP gross margin to be approximately 28 percent, compared to the previous non-GAAP guidance of approximately 32 percent primarily due to a higher mix of Enterprise, Embedded and Semi-Custom segment sales and lower than anticipated Computing and Graphics segment APU unit volumes due to weaker than expected OEM PC product demand. Additionally the company anticipates GAAP gross margin to be further impacted by a one-time charge of approximately $33 million associated with a technology node transition from 20 nanometer (nm) to FinFET. The company started several product designs in 20nm that will instead transition to the leading-edge FinFET node.

Cash and cash equivalents at the end of the second quarter are expected to be approximately $830 million, in line with expectations.

AMD will report second quarter 2015 results after market close on Thursday, July 16, 2015. AMD will hold a conference call for the financial community at 2:30 p.m. PT (5:30 p.m. ET) that day to discuss second quarter financial results and to provide information regarding expected third quarter results.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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