AMD Projects Disappointing Revenue Amid New Product Launches

AMD’s new products are giving sales a boost but it is not big enough to help profitability and satisfy investors after the stock increased almost fourfold last year, according to Bloomberg.

Fourth-quarter revenue may be as low as $1.34 billion, based on a forecast given by the company in a statement. That would match the average analyst estimate, according to data compiled by Bloomberg. Though the midpoint of the outlook would translate to about a 26 percent sales gain from a year earlier, it would be a decline of about 15 percent from $1.64 billion in revenue reported for the third quarter.

AMD now has designs for desktop and server computers that it says are as fast as or faster than rival products from Intel, the world’s largest semiconductor maker. Analysts are predicting those offerings, coupled with laptop processors to be launched later this year, will spur an increase in market share. The question is whether that’ll be fast enough to justify the gains the stock has made over the last two years.

AMD reported a gross margin of 35 percent. That compares with more than 60 percent at Intel and 58 percent at graphics-chip maker Nvidia. Net income in the third quarter was $71 million, or 7 cents a share, compared with a loss a year earlier. It was the first reported profit in five quarters. Sales rose 26 percent to $1.64 billion. Analysts projected profit of 5 cents a share on revenue of $1.51 billion.

AMD is Intel’s only rival in the market for PC processors and the second-largest maker of graphics processors for add-in cards for PCs used by gamers, behind Nvidia. CEO Lisa Su is trying to restore AMD’s fortunes after years when its products either came to late or fell short of promises. Under Su, the company has repaired its balance sheet and revamped the entire product lineup with new designs. Su told analysts on a conference call that while she was pleased with demand for Ryzen, the majority of that market is still being served by older AMD products and it will take time for the new design to become more prevalent.