Thursday, July 21, 2011

Advanced Micro Devices (NYSE: AMD): Q2 Earnings Preview 2011

Advanced Micro Devices, Inc. (NYSE: AMD) is scheduled to release second quarter earnings after the closing bell on Thursday, July 21, 2011. Analysts, on average, expect the company to report earnings of 8 cents a share on revenue of $1.58 billion. In the year ago quarter, the company reported earnings of 11 cents per share on revenue of $1.65 billion. The company has reported a profit in only four of the past 10 years.

Advanced Micro Devices, Inc., a semiconductor company, provides processing solutions for the computing, graphics, and consumer electronics markets in the United States, Canada, Europe, and Asia. Founded in 1969, AMD has less than 20 percent of the PC- processor market.

In the preceding first quarter, the Sunnyvale, California-based company's net income was $510 million, or 68 cents per share, compared to $257 million, or 35 cents per share, in the year-ago quarter.  On an adjusted basis, the company earned 8 cents a share in the first quarter. Revenue grew 2% to $1.61 billion from $1.57 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 5 cents a share on revenue of $1.61 billion. 

At its last earnings call in April, AMD said that it expects second quarter revenue to be flat to slightly down sequentially..

US chip makers have posted stronger results recently, with companies seeing significant boosts because of high demand from businesses or for smartphones. And analysts expect more of the same in the most recent quarter, pegging most of the bigger companies for better results than last year. Still, consumer demand for personal computers was weak in the first quarter and hasn't particularly shown signs of ramping up in the second quarter.

AMD's latest Fusion technology coupled with the early Intel Sandy Bridge recall, have given AMD a great boost. The company’s new range of chips, called Llano, is likely to help it win market share in notebook computers against Intel Corp. (NASDAQ: INTC). AMD’s Llano maintains lower power consumption and performs better when there is multi-tasking involved with heavy video or graphic processing. The new chips may help AMD bounce back in one particularly important segment: notebook processors. The company is now hiring Android driver development engineers, which shows that the company is  clearly looking to make a significant push into mobile computing. AMD has also seen solid demand for its Brazos platform for notebooks with sales crossing 1 million in its debut quarter. If AMD can effectively leverage the demand for tablets and other mobile devices through its Llano and Brozos processors, this could give a significant boost to its market share.

However, AMD is running without a permanent CEO. In January, the company announced the abrupt resignation of its then president and chief executive officer Dirk Meyer and appointment of chief financial officer Thomas Seifert as interim CEO. The chipmaker is looking for a CEO who can implement a change in direction mandated by the company’s board, led by Chairman Bruce Claflin.

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