Bloomberg News

AMD Sales Forecast Beats Estimates as Supply Chain Recovers

April 19, 2012

Advanced Micro Devices Inc. (AMD:US), the second-largest maker of processors for personal computers, forecast sales growth that beat estimates as supply constraints eased and demand increased for PC chips.

Second-quarter sales will grow about 3 percent from the first three months, the Sunnyvale, California-based company said today in a statement. That indicates revenue of about $1.63 billion, compared with the $1.59 billion average analyst estimate (AMD:US) compiled by Bloomberg.

AMD’s forecast may indicate that PC makers are recovering from disk-drive shortages caused by last year’s floods in Thailand. The company also may be rebounding from scarcity of its new chips, called APUs, as its supplier, Globalfoundries Inc., ramps up production.

“Demand is relatively healthy and the hard-disk makers are allowing shipments to fully meet that demand,” said Cody Acree, a Dallas-Based analyst for Williams Financial. He recommends buying AMD’s stock.

AMD shares (AMD:US) advanced as much as 2.9 percent in extended trading, after closing at $7.97 in New York. AMD has gained 48 percent this year.

Better Than Seasonal

AMD said its second-quarter sales growth may vary plus or minus 3 percent. The company’s revenue typically declines about 4 percent in the second quarter from the first, according to Chief Financial Officer Thomas Seifert.

AMD is now receiving a “steady supply” of chips made on the latest production technology, which allowed it “to meet our customer commitments in the quarter,” Chief Executive Officer Rory Read said in a statement. The problem of hard-drive shortages is now behind the industry, he said.

The company reported a first-quarter net loss of $590 million, or 80 cents a share, compared with a profit of $510 million, or 68 cents, a year earlier. Excluding one-time items, profit was 12 cents a share, compared with an average analyst estimate (AMD:US) of 9 cents.

AMD had a one-time charge of about $700 million triggered by a change to its supply agreement with Globalfoundries, the company’s former manufacturing facility now owned by the government of Abu Dhabi.

Sales fell 1.7 percent to $1.59 billion in the period. Analysts (SNDK:US) had predicted sales of $1.56 billion.

SanDisk Results

Separately, SanDisk Corp., which makes memory chips used in mobile devices, declined as much as 16 percent in extended trading after giving a second-quarter sales forecast that fell short of some analysts’ estimates.

The Milpitas, California-based company said revenue will decline to about $1 billion, plus or minus $50 million. Analysts on average had estimated sales of $1.28 billion, according to data compiled by Bloomberg.

SanDisk shares, which had fallen less than 1 percent to $40.47 at the close in New York, slipped as low as $33.90 in late trading.

Other semiconductor companies reported their first-quarter performance and gave second-quarter predictions today. Freescale Semiconductor Holdings I Ltd. (FSL:US), which said Chief Executive Officer Rich Beyer is retiring, reported a loss of $9 million, or 4 cents a share, on revenue of $950 million. It predicted second-quarter sales of $975 million to $1.025 billion. That compared with an average analyst estimate of $1.017 billion.

Altera Corp (ALTR:US), which makes programmable chips used in mobile- phone base stations, predicted second-quarter sales will range from $437.5 million to $452.8 million, compared with an average analyst estimate of $451 million.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles@bloomberg.net.


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Companies Mentioned

  • AMD
    (Advanced Micro Devices Inc)
    • $4.38 USD
    • 0.09
    • 2.05%
  • SNDK
    (SanDisk Corp)
    • $105.35 USD
    • 1.58
    • 1.5%
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