Advanced Micro Devices has gained more market share in its high-paying data centre business than rival Intel Corp, according to third-quarter results.
AMD earned $66 million in profit in the third quarter on about $5.6 billion in revenue, according to its earnings report. That’s not exactly an impressive figure in itself, but it gets worse compared to its performance in the third quarter last year, when profit was $923 million on revenue of $4.3 billion.
Its stock rose more than 3% in early trading as demand for server-processor chips helped AMD offset a slump in the PC market that accounts for nearly a third of its revenue.
AMD forecast fourth-quarter revenue growth of 14%, below market expectations but in stark contrast to an expected decline in revenue at Intel and Nvidia Corp. The stock was trading at $61.58, having lost more than half of its market value this year.
AMD says it missed its quarterly targets due to “the softening PC market and significant inventory reduction actions across the PC supply chain,” and that the acquisition of chip company Xilinx in February for an estimated $50 billion was a big factor in its lower profit.
Revenue increased 29% year-on-year, impacted by the acquisition of Xilinx by AMD, which was completed at the beginning of the current fiscal year. As a result, revenue would have increased less, although the growth rate would have remained positive. In the third quarter of last year, Xilinx generated revenue of $1.01 billion, while AMD’s revenue increased by $1.26 billion.
Analysts are pessimistic about AMD’s profits, arguing that the company is not delivering enough chips to clear the supply chain, which could lead to revenue growth next year.
The sources for this piece include an article in Reuters.
