AMD Beats Wall Street Estimates

The microprocessor maker delivers solid earnings, offers few details on the recent resignation of CEO Dirk Meyer.
Advanced Micro Devices has reported solid earnings in the fourth quarter, while assuring Wall Street that there's no strategic shift planned for the company following the recent resignation of its chief executive.

The microprocessor maker said Thursday that net income for the quarter ended Dec. 25 was $375 million, or 50 cents a share, compared to $1.18 bilion, or $1.52 a share, the same period a year ago. The year-ago quarter benefited from a $1.25 billion legal settlement with rival Intel. Revenue in the latest completed quarter was $1.65 billion, which was flat from a year ago, but beat Wall Street expectations of $1.63 billion, according to a poll by Thomson Reuters.

On a non-GAAP basis, AMD profits surpassed Wall Street estimates. The company reported net income of $106 million, or 14 cents a share, compared to analysts' expectations of 11 cents a share. The figures excluded a $236 million tax gain AMD received in the fourth quarter in spinning off its manufacturing operations into a separate company, Globalfoundries.

AMD released its earnings report 10 days after the sudden resignation of chief executive Dirk Meyer, whom the board believed didn't have a convincing strategy for taking the company into new markets, such as the emerging category of tablet computers.

Thomas Seifert, interim chief executive and CFO, did not provide a lot of details on Meyer's leaving. He did say it was over more than just whether the former CEO had a tablets strategy. "To reduce it to just a tablet statement would be wrong," Seifert said.

The interim CEO said the near-term priorities would remain on products for desktops, laptops, and servers, while tablets and other new types of mobile devices would certainly be a future target for the company. How AMD will negotiate development for all those form factors remains to be seen. The company does not have the resources of its much larger rival Intel.

One area AMD has focused on recently is mobile PCs. The company early this month released the first of its new class of Fusion processors that combine graphics and CPU on the same die to improve performance and deliver lower energy consumption. The new products are seen as being particularly useful in laptops and netbooks. Intel has released a similar product, codenamed Sandy Bridge, which is the company's second-generation Core processor.

While generating new products for PCs, AMD and Intel are seeing a slowing of sales to consumers, who are increasingly turning to tablets and smartphones to meet many of their computing needs. Tech researchers IDC and Gartner reported seeing in the fourth quarter a drop in PC sales as a result of tablets.

For the current quarter, AMD forecast revenues would be flat to slightly down from the fourth quarter. The current quarter will be the first in which the company will no longer recognize any share of net income or loss from Globalfoundries.

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