AMD eyes gaming consoles to offset slowing PC sales


Developed Micro gadgets forecast improved-than-anticipated revenue growth of 22 percent within the third quarter from the second, because the chip maker expands into new recreation consoles and other markets to offset slowing gross sales of personal computer systems.

However, the stock reversed earlier good points on Thursday after AMD said gross margins would fall because it seeks a foothold in game consoles.

AMD, which for many years has competed against market leader Intel Corp in imparting chips for PCs, is dashing to refocus on new markets as consumers purchase fewer laptops and extra drugs and smartphones.

AMD processors are being used in Microsoft Corp’s upcoming Xbox One and Sony Corp’s next-generation psgame consoles. These are largely behind AMD’s upbeat revenue forecast.

AMD said its gross margin in the 2d quarter was 40 percent and would fall to about 36 p.c within the third quarter. Analysts on reasonable had expected a 3rd-quarter gross margin of 39 percent.

With consumers an increasing number of enjoying games on tablets, it’s also uncertain how among the new consoles Microsoft and Sony would promote, however optimism about the impression on AMD’s earnings has helped pressure its replenish 73 p.c since the beginning of April.

Bernstein analyst Stacy Rasgon said AMD’s gross margin forecast used to be probably behind the after-hours drop in the company’s shares.

AMD’s document comes after Intel warned on Wednesday that it does no longer are expecting earnings to develop in 2013 as a result of slowing computer business.

World shipments of personal computer systems dropped eleven percent in the 2d quarter, the fifth straight quarterly decline in a market that has been devastated by using the popularity of capsules.

AMD pronounced second-quarter revenue of $1.161 billion, down from $1.413 billion within the yr-ago quarter. It said 1/3-quarter earnings would upward thrust 22 percent, plus or minus 3 percent, compared with the June quarter. That elevate can be about $1.416 billion.

Analysts, on average, had expected earnings of $1.108 billion within the 2nd quarter and $1.223 billion within the 1/3 quarter, in keeping with Thomson Reuters I/B/E/S.

AMD posted a web loss of $seventy four million, or 10 cents a share, in the 2nd quarter, when compared with a profit of $37 million, or 5 cents a share, in the identical quarter closing yr.

The company stated its non-GAAP loss per share was once 9 cents, better than the 12-cent loss expected by analysts.

AMD’s stock declined 3.66 % in extended change after closing up 5.ninety four p.c at $4.64.

Author: Rohit Shetty

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