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Advanced Micro Devices reported a first-quarter loss more than double Wall Street’s expectations and saw its gross margins collapse in the face of a market-share battle with its bigger rival, Intel.

AMD said on Thursday that it lost $611m, or $1.11 a share, compared with expectations of a 48 cent loss from analysts polled by Reuters Estimates.

Gross margins fell to 31 per cent, down from 40 per cent in the previous quarter and 59 per cent a year earlier.

“After more than three years of successfully executing our customer expansion strategy and significantly growing our unit and revenue base, our first-quarter performance is disappointing and unacceptable,” said Bob Rivet, chief financial officer.

AMD said it had suffered significantly lower unit shipments of its microprocessors, lower average selling prices, and margins had also been affected by the inclusion of figures from its ATI graphics chipmaker acquisition, which made lower-margin products. Mr Rivet said AMD “was aggressively addressing the issues that led to our significant revenue decline”.

Revenues were $1.2bn, in line with a warning it issued last week that sales would not reach the $1.6bn to $1.7bn originally forecast. They were 7 per cent lower than the $1,332bn recorded a year earlier.

AMD has issued three warnings this year as Intel has sought to regain market share with competitive pricing, newer products and a more advanced and cost-
effective architecture.

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