AMD Q2: Shrinking PC market leads to revenue miss

The chipmaker posted revenue of $942 million, a 35 percent year-over-year decline.


Weak demand in the consumer PC market continues to take its toll on computer hardware makers.

Following a profit warning earlier this month, Chipmaker AMD lost almost 20 percent of its stock value --- and it could be in for more rough waters following the official release of its second quarter financial report Thursday after the bell.

The semiconductor maker posted a net loss of $181 million, or 23 cents per share (statement).

Non-GAAP earnings were 17 cents per share on revenue of $942 million, down 35 percent year-over-year.

Wall Street was expecting AMD to post a net loss of 16 cents per share on revenue of $956 million. A year ago, AMD reported a profit of 5 cents a share on revenue of $1.44 billion.

In prepared remarks, AMD CEO Lisa Su pointed out AMD's ongoing struggle with the shrinking PC industry.

"Strong sequential revenue growth in our EESC segment and channel business was not enough to offset near-term challenges in our PC processor business due to lower than expected consumer demand that impacted sales to OEMs. We continue to execute our long-term strategy while we navigate the current market environment. Our focus is on developing leadership computing and graphics products capable of driving profitable share growth across our target markets."

Here's a closer breakdown of the company's performance, by department:

  • Computing and graphics: Segment revenue decreased 29 percent sequentially and 54 percent compared to the same quarter a year ago. AMD says the decrease was due to a drop in sales to OEMs of client notebook processors, while the annual decrease was due to decreased sales in client and graphics product lines.
  • Enterprise, embedded and semi-custom: Segment revenue increased 13 percent driven by higher sales of semi-custom SoCs. AMD blames the year-over-year decrease of 8 percent to decreased server sales and lower non-recurring engineering (NRE) revenue.

For Q3 2015, AMD expects revenue to increase 6 percent, plus or minus 3 percent, sequentially.

In after hours trading, AMD's stock price fell almost 5 percent.