PC market rebound doesn't help AMD's earnings

AMD reports a net loss of $36 million for the second quarter, but that's a big improvement from the same quarter a year ago

A rebound in the PC market aided Intel's earnings earlier this week, but did not help rival Advanced Micro Devices, which recorded a net loss for the second quarter, even as a shift in its business focus to graphics cards and custom chips boosted revenue.

AMD reported a net loss of $36 million, an improvement from the $74 million loss reported in the same quarter a year ago. Revenue in its Computing Solutions division, which deals in chips, was $669 million, declining by 20 percent year over year, due to a drop in processor shipments, AMD said in a statement.

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However, AMD's overall quarterly revenue grew, aided by growth in graphics and custom chip shipments. AMD second-quarter revenue was $1.44 billion, up 24 percent compared to the year-ago quarter. Analysts polled by Thomson Reuters expected $1.438 billion in revenue for the quarter.

AMD's laptop processor sales grew, but desktop chip sales were weak, AMD's CFO, Devinder Kumar, said in a statement.

Fearing a weak PC market for years to come, AMD has shifted its business model to focus more on adjacent markets like graphics cards and custom chips, which are part of the company's Graphics and Visual Solutions (GVS) unit. AMD is now supplying chips for Microsoft's Xbox One and Sony's PlayStation 4 gaming consoles, and has other custom chip deals in the pipeline.

Revenue for the GVS segment was $772 million, growing 141 percent year over year. Revenue for graphics chips decreased, the company said.

AMD is projecting revenue to increase 2 percent, plus or minus 3 percent, compared to the second quarter of 2014.

The PC market had a better-than-expected second quarter, thanks to upgrades from older Windows XP PCs. Worldwide PC shipments totaled 74.4 million PCs during the second quarter, down just 1.7 percent from the year-ago quarter, according to IDC. The research firm said that was the slowest quarterly decline in two years. IDC had predicted a decline of 7.1 percent.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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