AMD Is Adrift Amid the Tablet Revolution

by Tom Taulli | October 19, 2012 10:42 am

Advanced Micro Devices

As expected, Advanced Micro Devices (NYSE:AMD[1]) posted a dismal third-quarter earnings report[2]. Keep in mind that the company issued a warning[3] 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[4]), Google’s (NASDAQ:GOOG[5]) Android and even Amazon’s (NASDAQ:AMZN[6]) Kindle. In other words, the company’s deterioration could continue for quite a while.

Tom Taulli runs the InvestorPlace blog IPOPlaybook[7], 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.[8]”  Follow him on Twitter at @ttaulli[9]. As of this writing, he did not hold a position in any of the aforementioned securities.

Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.

Endnotes:

  1. AMD: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMD
  2. report: http://www.nytimes.com/2012/10/19/technology/advanced-micro-devices-posts-a-157-million-net-loss.html?partner=yahoofinance&_r=0
  3. issued a warning: https://investorplace.com/2012/10/amd-warns-on-revenue-cuts-forecast/
  4. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  5. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  6. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  7. IPOPlaybook: https://investorplace.com/ipo-playbook/
  8. How to Create the Next Facebook.: http://www.amazon.com/gp/product/1430246472/ref=s9_simh_gw_p14_d0_i1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-3&pf_rd_r=0GRB6ZMCTYDZVNG7Q7NV&pf_rd_t=101&pf_rd_p=470938811&pf_rd_i=507846
  9. @ttaulli: https://twitter.com/ttaulli

Source URL: https://investorplace.com/2012/10/amd-is-adrift-amid-the-tablet-revolution/