AMD back in the black, but no thanks to the PC
By Shona Ghosh
Posted on 18 Oct 2013 at 11:22
AMD's made good on predictions that it would return to profit, thanks to demand from console manufacturers, but that might not be enough to make up for its shrinking PC business.
In a mixed financial report, the chip maker said it has benefited from supplying semi-custom processors for the Xbox One and the PlayStation 4, swinging back to a third-quarter profit and beating analyst expectations.
But PC chip sales, AMD's core business, shrank 15% year on year in what CEO Rory Read admitted was the end of the "go-go era" of growth. "There is no doubt that the PC client segment, particularly at the entry level, will feel pressure from tablets," he said. "It’s a competitive space - we are going to be in there and we are going to compete because we have a very good product."
No shortcut back
Despite Read's bullishness, analysts compared AMD's performance unfavourably with Intel, which posted bigger profits earlier this week and saw PC chip sales grow 3.5% year on year.
"We see no shortcut to AMD to regain market share [in PCs]," wrote Auriga analyst Daniel Berenbaum. "Given past missteps, we have low confidence in AMD's design and manufacturing execution."
Meanwhile Intel is successfully pushing into mobile with its next-generation chips for PCs and tablets, codenamed Haswell and Bay Trail.
"They probably lost market share to Intel," said Stifel Nicolaus analyst Kevin Cassidy. "That was a surprise. Intel's Bay Trail and Haswell are coming in on top of where AMD was."
Read promised that tablets and mobile devices would form a "significant portion" of AMD's business in future. "We need to move and attack the new opportunities where the market's going, and that’s what we are doing."
AMD reported a net profit in the third quarter of $48 million, up from a loss of $157 million this time last year. Revenue was up to $1.46 billion, from $1.27 billion over the same period. Sales from AMD's Computing Solutions division, which includes PC chips, fell to $790 million, from $927 million in the third quarter of 2012.
Blaming PC's for AMD losses is like..
..blaming Tescos recent slump on restaurants not serving blue-stripe products.
Second-best doesn't sell.
If they want to beat Intel, they have to compete with their hardware, which sadly they don't.
Until 2010 I always bought AMD CPU's, but despite the heavier price of Intel, I'm glad I switched, as even current AMD CPU's couldn't offer better performance.
By cheysuli on 18 Oct 2013
My household has nearly 30PCs, of which about 15 are in very frequent use. None of them, however, have AMD processors
By PC746 on 18 Oct 2013
Some good news
Given Intel's 2 year leadership in chip fabrication, AMD can't compete head to head on processors.
However I think AMD would rather have 100% of the Xbox one and PS 4 markets than merely play second fidle to Intel in the PC market.
They also have some interesting stuff in the "dense server" marketplace but they do seem down and out in the high end wintel race.
By milliganp on 18 Oct 2013
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