AMD's fourth quarter earnings were in line with expectations, but sales were light and the company's outlook fell well short of estimates. The culprit: The end of the blockchain-related GPU surge, excess inventory and lower graphics sales.
With that backdrop, AMD's outlook isn't all that surprising. AMD projected first quarter revenue to be about $1.25 billion, give or take $50 million. Wall Street was looking for first quarter revenue of $1.47 billion. AMD said:
The sequential decrease is expected to be primarily driven by continued softness in the graphics channel and seasonality across the business. The year-over-year decrease is expected to be primarily driven by lower graphics sales due to excess channel inventory, the absence of blockchain-related GPU revenue and lower memory sales. In addition, semi-custom revenue is expected to be lower year-over-year while Ryzen, EPYC and Radeon datacenter GPU product sales are expected to increase.
Now AMD does have some positive developments in its corner. AMD CEO Dr. Lisa Su said the company doubled its EPYC processor shipments and delivered record GPU data center revenue in 2018. In addition, AMD has its next-gen 7nm Ryzen, Radeon and EPYC chips on the runway. Computing and graphics revenue was up 9 percent from a year ago and enterprise, embedded and semi-custom sales were flat.
Meanwhile, AMD secured key cloud wins with Amazon Web Services and Microsoft Azure.