Advanced Micro Devices, Inc. Losses In Line With Estimates, Sales Miss

Advanced Micro Devices released the earnings results from its second fiscal quarter after closing bell tonight, posting non-GAAP losses of 17 cents per share and revenue of $942 million, a 35% decline year over year and 8% sequentially. Analysts had been looking for losses of 17 cents per share and revenue of $950.5 million. In the same quarter last year, the company posted earnings of 5 cents per share on $1.44 billion in revenue.

Key metrics from AMD's earnings report

Operating losses were $137 million, while net losses were 23 cents per share or $181 million, compared to losses of 5 cents per share or $36 million in last year's second quarter. Advanced Micro Devices, Inc. (NYSE:AMD) management said PC demand was weaker than expected, which impacted their APU sales to OEMs. They also reported falling sales in graphics and client product lines.

Gross margin fell 7% percentage points quarter over quarter to 25%, which management said was due to a greater mix of sales from its Enterprise, Embedded and Semi-Custom segments. Also volumes of Computing and Graphics APUs were lower than expected, and AMD took a $33 million charge related to the transition from 20 nanometer technology to finFET. Excluding that charge, gross margin was 28%.

AMD President and CEO Dr. Lisa Su said in a statement:

"Strong sequential revenue growth in our EESC segment and channel business was not enough to offset near-term challenges in our PC processor business due to lower than expected consumer demand that impacted sales to OEMs. We continue to execute our long-term strategy while we navigate the current market environment."

AMD's earnings by segment

Computing and Graphics revenue declined 54% year over year, with operating losses for the segment at $147 million. Revenue from AMD's Enterprise, Embedded, and Semi-Custom segment saw an 8% year over year decline  as a result of lower server sales and non-recurring engineering revenue. Operating income for the segment fell to $27 million from last year's $97 million.

Operating losses in the other category were $17 million, compared to last year's losses of $28 million. The decline was mostly the result of lower stock-based compensation and no amortization on acquired intangible assets.

For the third quarter, AMD expects a 6%, +/- 3%, increase in revenue.

As of this writing, shares of AMD were up 2.3% at $1.91 per share.