AMD's Q1 sales down from a year ago, but better than expected

AMD's first quarter had some issues, but is seeing gross margin gains due to data center GPUs and server chips.

How AMD's EPYC line has turned upside down the server market AMD did something that was long overdue -- it upended a stagnant and complacent server market, and all in a year.

AMD's first quarter sales were down sharply from a year ago, but the results were better than expected.

The chipmaker's report comes after Intel noted weakness in its data center business in China. AMD has a smaller data center footprint, but has been able to grow its server processors and GPUs.

AMD reported first quarter revenue $1.27 billion, down 23 percent from a year ago. The company had signaled the sales declines last quarter. The company reported net income of $16 million, or a penny a share, in the first quarter. Non-GAAP earnings for the first quarter were 6 cents a share.

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Wall Street was expecting AMD to report first quarter revenue of $1.26 billion with non-GAAP earnings of 5 cents a share.

Dr. Lisa Su, AMD CEO, said the company saw gross margin improvements in the first quarter due to its Ryzen and EPYC processors. Data center GPU revenue doubled from a year ago. Indeed, gross margin in the first quarter was 41 percent, up 5 percent from a year ago.

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By division, AMD's computing and graphics unit delivered first quarter revenue of $831 million, down 26 percent from a year ago. The company saw lower graphics sales in its channel, but that decline was partially offset by stronger client and data center GPU demand.

AMD's enterprise, embedded and semi-custom revenue was $441 million, down 17 percent from a year ago.

For the second quarter, AMD is projecting second quarter revenue of $1.52 billion, give or take $50 million. The sales declines of roughly 13 percent from a year ago will be due to little blockchain GPU revenue and graphics channel revenue. The outlook is in line with current expectations.

AMD said its annual revenue will be up in the high single digit percentages for 2019.

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