AMD Is Adrift Amid the Tablet Revolution

The chipmaker posted a rough quarter and provided soft guidance

   

AMD1 AMD Is Adrift Amid the Tablet Revolution

As expected, Advanced Micro Devices (NYSE:AMD) posted a dismal third-quarter earnings report. Keep in mind that the company issued a warning last week, which sent the shares to a 52-week low. Shares were trading some 10% lower on Friday, at $2.35, far outpacing a broad market selloff.

In the quarter, there was a loss of $157 million, or 21 cents a share, which was down from a profit of $97 million, or 13 cents a share in the same period a year ago. Revenues fell from $1.69 billion to $1.27 billion.

Unfortunately, it looks like the bad news is far from over. For Q4, AMD forecasts a drop in revenues of as much as 9%, to $1.1 billion. The Wall Street estimate was for fourth-quarter revenues of $1.31 billion.

As a result, AMD is taking tough actions. For example, the company is going to slash 15% of its workforce, about 12,000 employees. The move should reduce costs by about $190 million for 2013.

But the biggest hurdle is that AMD does not have a strategy to capitalize on the tablet revolution, which is dominated by Apple (NASDAQ:AAPL), Google’s (NASDAQ:GOOG) Android and even Amazon’s (NASDAQ:AMZN) Kindle. In other words, the company’s deterioration could continue for quite a while.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2012/10/amd-is-adrift-amid-the-tablet-revolution/.

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