AMD Earnings Not Bad, but Outlook Is Shaky

Advanced Micro Devices Inc. (NASDAQ: AMD) reported fourth-quarter and full-year 2015 earnings after markets closed Tuesday. For the quarter, the chipmaker posted an adjusted net loss per share (EPS) of $0.10 on revenues of $958 million. In the same period a year ago, the company reported EPS was break-even on revenues of $1.24 billion. Fourth-quarter results compare to the Thomson Reuters consensus estimate for a net loss of $0.10 per share on $954.74 million in revenues.

For the full year AMD reported a net loss of $0.54 per share on revenues of $3.99 billion compared with earnings per share of $0.06 in 2014 on revenues of $5.51 billion. Analysts were looking for a net loss of $0.54 per share and 2015 revenues of $3.98 billion.

The company said it expects first quarter revenues to fall by 14% (+/-3%) sequentially. Analysts were expecting $1.48 billion for the quarter. A sequential drop of 14% leaves revenues at about $824 million. Gross margins are expected to rise from 30% in the fourth quarter of 2015 to 32% in the first quarter of 2016.

For the full year AMD’s CFO noted that revenues is expected to grow year-over-year, but gave no numbers. The company expects to return to non-GAAP profitability in the second half of 2016.

Analysts are looking for a first quarter net loss of $0.11 per share and a full year net loss of $0.28 per shares. First-quarter revenues are pegged at $900.18 million and for the full year revenues are forecast at $3.94 billion.

The company’s CEO, Dr. Lisa Su, said:

AMD closed 2015 with solid execution fueled by the second straight quarter of double-digit percentage revenue growth in our Computing and Graphics segment and record annual semi-custom unit shipments. While 2015 was challenging from a financial perspective, key R&D investments and a sharpened focus on innovation position us well to deliver great products, improved financial results and share gains in 2016.

AMD’s shares closed at $1.95 today and traded down more than 7% in after-hours trading today, to $1.81, in a 52-week range of $1.61 to $3.37. The consensus price target for the shares was around $2.32 before today’s report.