AMD Projects Revenue Gains With Limited Margin Expansion

AMD, trying to make a dent in Intel’s dominance of computer processors, projected revenue will grow more quickly than some analysts had estimated, but gave a disappointing forecast for profitability, according to Bloomberg.

First-quarter revenue will be about $1.55 billion, the company said in a statement. That indicates growth of about 31 percent from an adjusted total of $1.18 billion for the same period a year earlier and compares with an average analyst estimate for a 27 percent increase.

The company said gross margin, or the percentage of sales remaining after deducting the cost of production, will be greater than 36 percent for 2018. That sparked concerns that AMD has increased the pace of its spending to keep up with larger rivals Intel and Nvidia. Intel reported a gross margin of 63 percent in the fourth quarter.

Fourth-quarter net income was $61 million, or 6 cents a share, compared with a loss a year earlier. Sales rose 34 percent to $1.48 billion. Profit minus certain items was 8 cents a share. Analysts had projected profit on that basis of 5 cents a share on revenue of $1.41 billion.

AMD’s earnings may also provide a window into how the computer industry is reacting to news earlier this month that a feature of all modern processors makes them vulnerable to the theft of information previously thought to be secure. Intel, AMD and software makers have been rushing to deliver software patches to close off that potential avenue of attack from hackers. Some of those patches have slowed computers or caused older ones to have issues such as unscheduled restarts.