AMD earnings get a much-needed lift from console sales

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AMD exceeded revenue expectations for the first quarter of 2014, as sales into the game console market lifted the company’s revenues by 28 percent. But the company also reported a loss, disappointing Wall Street.

AMD reported a loss of $20 million on revenue of $1.4 billion for the first quarter, versus a loss of $146 million on revenue of $1.09 billion for the same period a year ago. Those numbers also included a $200 million “take or pay” payment to GlobalFoundries, the wafer fab that AMD uses to manufacture its chips. Analysts polled by Yahoo Finance expected AMD to report neither a profit nor a loss ($0.00) and revenue of $1.34 billion.

In general, AMD’s earnings followed its most recent pattern. Its Computing Solutions segment declined by 12 percent year over year to $663 million, as the shift away from traditional PCs helped lower AMD’s shipments. The unit’s operating loss was $3 million. The average price paid for its CPUs declined as well.

However, its other Graphics and Visual Solutions business climbed 118 percent year over year, mainly buoyed by the fact that the Microsoft Xbox One, Nintendo Wii U and Sony PlayStation 4 are all now in mass production. The unit earned $91 million in operating income. All three consoles use AMD’s chips. But AMD also reported “strong demand” for its Radeon R7 and R9 graphics chips, which were recently introduced.

“AMD continued our momentum by building on the solid foundation we set in the second half of 2013, further transforming the company,” said Rory Read, AMD’s president and chief executive, in a statement. “Backed by our powerful x86 processor cores and hands-down best graphics experiences, we achieved 28 percent revenue growth from the year-ago quarter. We are well positioned to continue to grow profitably as we diversify our business and enable our customers to drive change and win.”

AMD’s current debt stands at $2.14 billion, while its cash and short-term investments stand at $982 million, the company reported. It had previously set $1 billion in cash as a target.

AMD will hold a conference call later Thursday afternoon to discuss its earnings. 

For the second quarter of 2014, AMD expects revenue to increase 3 percent, plus or minus 3 percent, sequentially, AMD said—meaning that it expects revenue to be unchanged, or slightly higher, than it is now.

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