Friday, January 25, 2013
Rory Read, president and CEO of Advanced Micro Devices Inc. (AMD), said Tuesday (Jan. 22) that the company continues to make progress on its strategy for returning to profitability after the company reported fourth quarter sales that beat analysts' expectations but said it expects first quarter sales to be below estimates.
"We made progress in the fourth quarter delivering on our commitments, managing expense and cash, and beginning to transform AMD for long term growth and profitability," Read told analysts on a conference call following the fourth quarter report. Read said AMD increased its cash flow, reduced excess inventory and lowered operating expenses in the fourth quarter "in the face of a difficult market."
But Read acknowledged that AMD's full-year results fell short of expectations as a tough economy hurt PC sales. AMD plans to complete the majority of a significant restructuring announced last year during the first quarter, Read said. The company's goal is to reduce its operating expenses by 25 percent from early 2012 levels by the third quarter, and to return to profitability and positive cash flow by the second half of this year, he said.
AMD is charting a new course to focus more heavily on non-PC markets, including embedded markets, heterogeneous computing and dense servers. Since Read took over as AMD's CEO in 2011 the company has been looking to shed its longtime image as a distant No. 2 player in the PC processor space to Intel and re-make itself as a system-on-chip provider.
Read said AMD's strategic shift would take several quarters. The company expects to PC market to remain slugish in the first half of 2013.
AMD plans to introduce several new graphics chips and processors in the first half of 2013, Read said. "We have the right strategy and a new set of products coming to market in 2013," Read said.
Last October, AMD announced it would lay off 15 percent of its employees to cut costs while undertaking an aggressive push into embedded markets to counter declining PC sales. The company also cut 10 percent of its workforce 2011.
AMD (Sunnyvale, Calif.) reported fourth quarter sales of $1.16 billion, down 9 percent from the previous quarter and down 32 percent from the fourth quarter of 2011. AMD reported a net loss of $473 million, or 63 cents per share, wider than net losses of $157 million and $177 million in the previous and year-ago quarters, respectively.
On a pro forma basis, excluding charges associated with the termination of AMD's wafer supply agreement with Globalfoundries and restructuring charges, AMD reported a net loss of $102 million, or 14 cents per share.
AMD's fourth quarter sales were in line with consensus analysts' expectations, according to Yahoo Finance. The company's pro forma net loss was smaller than analysts expected.
Read said AMD enjoyed significant growth in sales of SeaMicro dense servers in the fourth quarter, driven by large-scale cloud data center wins. SeaMicro solutions are being deployed and evaluated by a broad variety of marquee customers, he said. AMD bought SeaMicro last year for $334 million.
Read also highlighted AMD's recent design wins at a new customer, Vizio, which he said were based on the graphics performance and long battery life of AMD's accelerated processing units (APUs), which combine graphics and microprocessing capability. The first Vizio products featuring AMD APUs will be two touch-based ultrathin notebook PCs and one tablet, he said.
For all of 2012, AMD reported sales of $5.42 billion, down 17 percent from 2011. The company reported a net loss of $1.12 billion, or $1.60 per share, compared with a net income of $491 million in 2011.
For the first quarter of this year, AMD expects sales to decline 6 to 12 percent sequentially to between $1.02 billion and $1.09 billion. AMD's first quarter forecast was below consensus analysts' expectations of $1.11 billion, according to Yahoo Finance.
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