AMD Quarter Earnings Beat the Street, but Still Disappoint

By Jessica Davis  |  Print this article Print

AMD's earnings didn't spark the same kind of optimism that Intel's earnings did recently, and executives at the chip maker say that they aren't planning for any big changes in buying patterns when Microsoft Windows 7 is released.

Advanced Micro Devices’ (NYSE: AMD) revenues of $1.18 billion beat Wall Street expectations of $1.13 billion, but that wasn’t enough to quell disappointment that the company’s results were not as impressive as its larger rival Intel’s, announced last week.

AMD revenue was flat sequentially and down 13 percent from the same period last year. AMD reported a net loss of $330 million, compared with a net loss of $1.19 billion during the same period last year and $416 million for the previous sequential quarter.

Looking ahead, AMD said that, given macroeconomic conditions, limited visibility and historical seasonal patterns, it expects revenue to be up slightly in Q3. But don’t expect Windows 7 revenue to contribute significantly to the company’s coffers.

AMD CEO Dirk Meyer told analysts during a conference call following the earnings announcement that while the company believes that Windows 7 is a strong product, "We're not modeling for our own purposes Win 7 being a huge contributor to overall unit demand," he said. "But I hope at the very least there's some ability for us and the industry, really, to upsell the richer, more richly configured machines, particularly around the GPU [graphics processing unit]."

AMD’s less optimistic outlook echoed the difference between Intel's and AMD’s earnings conference call tones last quarter, too, as the larger chip maker expressed confidence that the PC market had bottomed out, while AMD’s CEO said he wondered how anyone could think that the market had hit bottom.

The difference may come from the one PC product that has proven recession-proof this year—netbooks.

As one analyst pointed out during AMD’s earnings call this week, while most technology vendors have skin in the netbook game, or have been working to plan products for that space, AMD had been silent in that area.

But Meyer told analysts not to count AMD out quite yet.

"We're aggressively working on more power-efficient and lower-cost components purpose-built for lower price points in the marketplace like those associated with netbooks," Meyer said during the call. "We continue to see kind of a gap between a netbook on the one hand and smartphones on the other. We're clearly targeting devices with reasonably useful keyboards and 10-inch screen sizes and the continuum of PC-like devices above that independent of what operating system happens to be loaded on those machines."

Meyer added that AMD currently has no plans to target the smartphone market.

AMD shares were trading down close to 13 percent the day following the earnings announcement.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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