AMD's revenue drops 31 percent as CPU sales plummet

Sales of AMD's processors and graphics chips were both down from last year

By , IDG News Service |  IT Management

Advanced Micro Devices reported a 31 percent drop in revenue for the first quarter as it continues to battle a weak PC market and lackluster demand for its chips.

Sales in AMD's Computing Solutions group, which makes processors for PCs and servers, plummeted 38 percent from last year to US$751 million. Its graphics chip business did slightly better, with sales down 12 percent to $337 million, AMD announced Thursday.

Overall revenue for the quarter, ended March 30, was $1.09 billion, AMD said. It reported a net loss for the quarter of $146 million, or $0.19 per share, an improvement on its loss of $590 million, or $0.80 per share, a year earlier.

It's a tough time for the PC industry as a whole, with the economy stumbling along and more people turning to smartphones and tablets for their computing. PC shipments were down almost 14 percent in the first quarter, research firm IDC said last week. That was the biggest year-on-year quarterly decline IDC has ever recorded.

Intel is also suffering, but not as much as AMD. Intel reported a 25 percent drop in profit earlier this week, on a 2.5 percent decline in revenue.

AMD is trying to get back to growth by moving into new markets. Last year it bought SeaMicro, which makes low-power servers. It also signed a licensing deal with UK chip design company ARM and said it will develop a line of 64-bit ARM processors, another play for the low-power server space.

AMD has also cut jobs to reduce its costs. Last October it said it would lay off 15 percent of its workforce in a restructuring program intended to save the company $190 million this year. It hopes the move will help it to break even by the end of this year's third quarter.

"Our first-quarter results reflect our disciplined operational execution in a difficult market environment," AMD President and CEO Rory Read said in a statement Thursday.

"We will continue to diversify our portfolio and attack high-growth markets like dense server, ultra low-power client, embedded and semi-custom solutions to create the foundation for sustainable financial returns," he said.

Despite the poor results, AMD's revenue and pro forma profit both beat the modest expectations of financial analysts, according to a poll by Thomson Reuters.

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